TaxTMI Updates e-Newsletter
May 28,2019

Profiteering under Section 171 of the CGST Act, 2017 - benefit of input tax credit - calculation of profiteered amount by DGAP - methodology for computation of profiteering - initiation of penalty proceedings under Section 122 of the CGST Act, 2017 - direction to pass on ITC benefit and reduce prices - monitoring and compliance by Commissioner of CGST/SGST

Profiteering under Section 171 of the CGST Act, 2017 - benefit of input tax credit - The Respondent contravened the obligation under Section 171 by not passing on the benefit of additional input tax credit to buyers. - HELD THAT: - The Authority accepted the DGAP's verified analysis that the ratio of ITC to taxable turnover rose from 0.61% (pre-GST) to 3.45% (post-GST), yielding a net ITC benefit of 2.84%. The DGAP applied that percentage to amounts collected in the post-GST period and computed the aggregate excess collection. The Respondent did not dispute the existence of a net benefit of ITC and, on receipt of the DGAP report, accepted the computed amounts and paid the same to affected buyers. The Authority therefore concluded that Section 171 was contravened insofar as the additional ITC benefit was not passed on contemporaneously to recipients. [Paras 11, 18, 19]

Finding of profiteering established: additional ITC benefit of 2.84% was not passed on and constituted contravention of Section 171.

Calculation of profiteered amount by DGAP - methodology for computation of profiteering - The DGAP's computation of the profiteered amount is accepted and the profiteered amount is determined to be Rs. 41,82,198/- for the period July 2017 to August 2018. - HELD THAT: - The DGAP computed ITC ratios for pre- and post-GST periods, determined the incremental ITC percentage (2.84%), applied it to the taxable values raised during July 2017 to August 2018 and arrived at a recalibrated demand and excess collection. The Annexure-15 computation was unchallenged by the Respondent and the Authority relied on the same to determine the profiteered amount. The Respondent subsequently paid the computed amount along with interest to the affected buyers, which the Authority took on record. [Paras 11, 12, 18, 20]

Profiteered amount fixed at Rs. 41,82,198/- for July 2017 to August 2018, as per DGAP computation (Annexure-15).

Direction to pass on ITC benefit and reduce prices - monitoring and compliance by Commissioner of CGST/SGST - The Respondent is directed to reduce prices commensurate with the ITC benefit and the Commissioner CGST/SGST, Haryana is directed to monitor compliance and report. - HELD THAT: - Under Rule 133(3)(a) the Authority directed that prices realized from buyers be reduced to reflect the ITC benefit already determined and that the amount profiteered (already paid with interest) pertains to July 2017 to August 2018. The Authority further directed that any future ITC benefit accruing subsequently must be passed on, and empowered the Commissioner CGST/SGST, Haryana, under Rule 136, to supervise implementation and submit a compliance report within four months. [Paras 21, 23]

Respondent ordered to reduce prices commensurate with ITC benefit and Commissioners of CGST/SGST, Haryana directed to monitor and report compliance within four months.

Initiation of penalty proceedings under Section 122 of the CGST Act, 2017 - The Authority concluded that the Respondent's conduct amounted to an offence under Section 122(1)(i) and directed issuance of a show-cause notice for penalty under Section 122 read with Rule 133(3)(d). - HELD THAT: - Having found that the Respondent deliberately realized extra amounts and thereby violated Section 171, the Authority observed this constituted an offence under Section 122(1)(i). Consequently, the Authority directed that a notice be issued calling upon the Respondent to explain why penalty under Section 122 (read with the relevant rule) should not be imposed. [Paras 22]

Show-cause notice to be issued to the Respondent proposing penalty under Section 122.

Final Conclusion: The Authority accepted the DGAP's computation and found that the Respondent had profiteered by not passing on an additional ITC benefit of 2.84%; the profiteered amount for July 2017 to August 2018 is fixed at Rs. 41,82,198/-, which the Respondent has paid with interest; the Respondent is directed to reduce prices commensurately and the Commissioner CGST/SGST, Haryana is directed to monitor compliance; a show-cause notice for penalty under Section 122 is to be issued.

Re-opening of assessment - Re-opening under Section 147/148 beyond four years - requirement of failure to disclose - Reasons to believe - Tangible material - Change of opinion - Failure to disclose fully and truly all material facts - Assessee's disclosure during original assessment - Non-application of mind

Re-opening under Section 147/148 beyond four years - requirement of failure to disclose - Reasons to believe - Tangible material - Change of opinion - Validity of the notice re-opening assessment for AY 2011-2012 issued beyond four years - HELD THAT: - Where an original assessment is completed under Section 143(3) and re-opening is sought beyond four years, the first proviso to Section 147 requires that escapement of income must be on account of the assessee's failure to file a return or to disclose fully and truly all material facts in response to notices such as under Section 142(1). The reasons recorded must themselves demonstrate existence of tangible material and satisfaction about non-disclosure; they cannot rest on a mere change of opinion or be supplemented by extraneous material filed later. In the present case the assessee had, during the original assessment proceedings, been issued detailed questionnaires specifically calling for particulars about the Rs. 40 crores received from PACL and had furnished bank statements, confirmations from PACL, ledger accounts and a further letter (dated 2nd February, 2013) explaining deployment and refund of the amount. Thus all material necessary for forming an opinion on the transaction was already before the AO; no fresh tangible material supporting escapement was shown in the reasons. The recorded reasons merely repeated the statutory language about non-disclosure and did not refer to the disclosures actually made during the original assessment, so the jurisdictional requirement for re-opening was not satisfied and the notice amounted to an impermissible re-opening based on change of opinion. [Paras 18, 19, 20, 21, 22]

Notice dated 29th March, 2018 re-opening assessment for AY 2011-2012 quashed for failure to show tangible material and requisite satisfaction about non-disclosure.

Non-application of mind - Assessee's disclosure during original assessment - Effect of procedural defects and non-application of mind in reasons/approval for re-opening - HELD THAT: - The proforma for seeking supervisory approval incorrectly recorded that the original assessment was under Section 143(1), whereas it was under Section 143(3). That error, and the absence in the reasons of any reference to the detailed questionnaires and the materials furnished in response, indicate non-application of mind by both the assessing officer and the approving superior officer. This omission helps explain why the reasons did not engage with the disclosures already made by the assessee concerning the Rs. 40 crores and reinforces that the re-opening was unjustified. [Paras 23]

The re-opening and the order rejecting objections suffer from non-application of mind and are set aside.

Final Conclusion: The notice under Section 147/148 dated 29th March, 2018 and the order dated 26th October, 2018 rejecting objections are quashed and set aside; the writ petition is allowed with no order as to costs.

Disallowance under Rule 8D - Presumption of investment funded from interest free own funds - Computation of average value of investment for Rule 8D(2)(iii) - Onus of proof under section 68 regarding identity, genuineness and creditworthiness of creditors - Remand for fresh adjudication on probative documentary evidence

Disallowance under Rule 8D - Presumption of investment funded from interest free own funds - Computation of average value of investment for Rule 8D(2)(iii) - Validity and scope of disallowance of expenditure under Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Income tax Rules in the assessment year in question. - HELD THAT: - The Tribunal applied the settled principle that where an assessee has sufficient interest free funds, overdrafts and loans, a presumption arises that investments are made out of interest free funds and not out of borrowed funds; accordingly, if the Assessing Officer finds that the assessee's interest free funds were sufficient to meet the investments, no disallowance is to be made under Rule 8D(2)(ii). This approach follows the decisions cited in the judgment (CIT vs Reliance Utilities and Power Ltd.; CIT vs HDFC Bank Ltd.; Principal CIT vs Rasoi Ltd.). Further, for the purpose of computing the average value of investments under Rule 8D(2)(iii), the Tribunal directed that only those investments which actually yielded exempt dividend income during the previous year are to be taken into account; investments which did not yield any exempt dividend income must be excluded when working out the average investment value, following the coordinate bench decision in DCIT vs REI Agro Ltd. and its confirmation. The AO is directed to examine the assessee's own funds and reserves and to exclude non income yielding investments while calculating average investment, and to proceed accordingly. [Paras 4]

Directed AO to ascertain sufficiency of interest free funds and, if sufficient, to refrain from making disallowance under Rule 8D(2)(ii); directed AO to exclude investments that did not yield exempt dividend income while computing average investment under Rule 8D(2)(iii).

Onus of proof under section 68 regarding identity, genuineness and creditworthiness of creditors - Remand for fresh adjudication on probative documentary evidence - Whether the interest paid to loan creditors and amounts credited by creditors, disallowed under section 68, should be restored on the basis of documents now tendered. - HELD THAT: - Both parties agreed that the assessee had not originally furnished sufficient documentary proof of the identity, genuineness and creditworthiness of the creditors before the AO; consequently the AO made additions under section 68. The assessee sought to place further documents on record. The Tribunal observed that certain confirmation of bank statements and ROC details had been filed but were not considered by either the AO or the CIT(A). In the facts and circumstances the Tribunal considered it proper, in the interest of justice, to remit the matter to the AO to decide afresh after considering the documents and explanations already submitted and any additional evidence the assessee may produce to establish bonafides of the creditors. The ground relating to this addition is allowed for statistical purposes and the matter is remanded for de novo consideration by the AO. [Paras 7]

Matter remitted to the AO for fresh adjudication on the issue of identity, genuineness and creditworthiness of creditors in light of documents already filed and any further evidence to be produced; ground allowed for statistical purposes.

Final Conclusion: Appeal disposed by directing (a) limited factual and legal re examination by the Assessing Officer on the Rule 8D disallowance as indicated, and (b) remand to the Assessing Officer for fresh adjudication on the genuineness of creditors after considering the documents filed; appeal allowed for statistical purpose.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Making an incorrect claim in law is not furnishing inaccurate particulars - Penalty cannot survive on an addition deleted on appeal - Applicability of precedent in penalty proceedings

Penalty cannot survive on an addition deleted on appeal - Penalty under section 271(1)(c) insofar as it related to the disallowance under section 40(a)(ia) which was deleted by the ITAT. - HELD THAT: - The quantum addition of Rs. 21,60,000 under section 40(a)(ia) was ultimately deleted by the ITAT. The Tribunal held that where an addition on which penalty was levied stands deleted on appeal, the corresponding penalty does not survive. The Assessing Officer was directed to give effect to the ITAT order and the penalty cannot be sustained insofar as it relates to the deleted addition. [Paras 4]

Penalty deleted in respect of the addition under section 40(a)(ia); AO to give effect to the ITAT order.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Making an incorrect claim in law is not furnishing inaccurate particulars - Applicability of precedent in penalty proceedings - Validity of penalty under section 271(1)(c) in respect of the addition on account of short term capital gain based on valuation apportionment between land and building. - HELD THAT: - The Tribunal examined whether the assessee had furnished inaccurate particulars in bifurcating the sale consideration between land and building. The claim was founded on an architect's valuation report which was partly accepted by the CIT(A) and not shown to be factually incorrect. Citing the Apex Court's authority that making a claim unsustainable in law does not amount to furnishing inaccurate particulars, the Tribunal found the view of the lower authorities untenable. There was no finding that the assessee withheld relevant information or gave factually incorrect particulars; the dispute was over valuation and legal interpretation. On that basis, and following Reliance Petroproducts (as applied in the order), the penalty was deleted. [Paras 4]

Penalty under section 271(1)(c) deleted insofar as it related to the short term capital gain addition.

Final Conclusion: The impugned penalty order under section 271(1)(c) is deleted both in respect of the addition under section 40(a)(ia) which was set aside by the ITAT and in respect of the addition on short term capital gain, as the Tribunal found no furnishing of inaccurate particulars; the AO is directed to give effect to the ITAT order.

Business income - long term capital gains - ambiguity in appellate order - recall for fresh decision - rectification under section 254(2) of the Act

Business income - long term capital gains - ambiguity in appellate order - recall for fresh decision - rectification under section 254(2) of the Act - Whether the Tribunal's order dated 19.12.2018 clearly determines if the gain on sale of the flat is taxable as business income or as long term capital gain and whether the issue should be recalled for fresh decision. - HELD THAT: - The impugned order reproduced the finding that the lower authorities were correct in treating the gain as business income but then directed the Assessing Officer to compute long term capital gains in respect of the flat. This creates an internal inconsistency and fails to state unequivocally whether the gain is to be assessed as business income or as long term capital gain. In view of that ambiguity, the Tribunal found that the matter could not stand as a final adjudication on the characterisation of the gain. The Tribunal invoked the remedial route under the noted provision and recalled the issue so that the question may be decided afresh in the interest of justice. Consequently, the miscellaneous application seeking rectification/recall was allowed and the issue remitted for fresh decision.

The miscellaneous application is allowed; the Tribunal's order dated 19.12.2018 is recalled and the question whether the gain is business income or long term capital gain is to be decided afresh.

Final Conclusion: Miscellaneous Application allowed; the Tribunal recalled its earlier order dated 19.12.2018 and directed that the characterisation of the gain on sale of the flat (business income or long term capital gain) in respect of A.Y.2011-12 be decided afresh.

Reopening of assessment and service of notice under section 148 - assessment under section 144 in absence of compliance and opportunity - taxability of long term capital gains on sale of agricultural land within municipal limits - ownership in individual capacity versus Hindu Undivided Family - computation of indexed cost of acquisition and determination of fair market value as on 01/04/1981 - remand to assessing officer for valuation or referral to District Valuation Officer - deduction under section 54B

Reopening of assessment and service of notice under section 148 - Validity of notice under section 148 and consequent reopening when notices were dispatched by speed post and not returned as unserved - HELD THAT: - The Tribunal accepted the finding of the CIT(A) and the assessment record that notices under section 148 were sent by speed post to the address appearing in the sale deed and were not returned by postal authorities. The assessee's inspection of the file did not produce any evidence of non service; he did not contend that the address in the sale deed was incorrect. In these circumstances the normal presumption of service applies and the reopening on the basis of information received (AIR) and reasons recorded was held valid. The Tribunal therefore rejected the contention that the proceedings under section 148 were invalid for want of service. [Paras 8, 9, 10, 11]

Notice under section 148 held to be duly served and reopening valid; grounds 1-3 dismissed.

Ownership in individual capacity versus Hindu Undivided Family - Whether the capital gain arose in the hands of the assessee individually or in the hands of his HUF - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the sale documents and the enquiry report recorded the appellants as individual sellers and did not indicate that the property was held or sold in the name of a Hindu undivided family. On the material before the authorities there was no basis to treat the transfer as having occurred in HUF status. Consequently the assessment and notice directed to the assessee in his individual capacity were held to be correct. [Paras 5, 9, 10, 11]

Claim that capital gain belonged to the HUF rejected; assessment in assessee's individual capacity sustained.

Computation of indexed cost of acquisition and determination of fair market value as on 01/04/1981 - remand to assessing officer for valuation or referral to District Valuation Officer - Validity of the Assessing Officer's adoption of an estimated fair market value as on 01/04/1981 without record of supporting enquiries - HELD THAT: - Section 55(1) and the statutory meaning of fair market value require that cost for indexation may be the actual cost of acquisition or the FMV as on 01/04/1981. The AO had adopted a FMV (per acre) based on unspecified market enquiries but did not place any material evidencing those enquiries on record. The Tribunal found the AO's adopted FMV unsupported and therefore set aside the computation. The matter was remitted to the AO to afford the assessee an opportunity to furnish evidence of cost of acquisition or FMV as on 01/04/1981; at the assessee's option one of these may be adopted for indexation. If unsatisfied, the AO may refer the matter to the District Valuation Officer or otherwise determine FMV in accordance with law. [Paras 13]

Adopted FMV rejected for want of evidence; issue remitted to AO for fresh determination with directions (including referral to DVO if necessary).

Deduction under section 54B - Claim for deduction under section 54B for investment in agricultural land - HELD THAT: - No arguments or evidence were advanced by either party before the Tribunal on the entitlement to deduction under section 54B. In the absence of any material or contention addressed to the point, the Tribunal did not uphold the claim. [Paras 14]

Ground relating to deduction under section 54B dismissed.

Final Conclusion: The appeal is partly allowed. Reopening under section 148 and assessment in the assessee's individual capacity are upheld and grounds 1-3 are dismissed; the AO's adopted fair market value as on 01/04/1981 is set aside and the matter is remitted to the AO to determine cost or FMV (with power to refer to DVO) after affording the assessee an opportunity; the claim under section 54B is dismissed.

Unexplained cash credit under section 68 - onus of proof regarding identity, genuineness and creditworthiness of creditors - transactions through proper banking channels as evidence of genuineness - bank verification under section 133(6) of the Income-tax Act

Unexplained cash credit under section 68 - onus of proof regarding identity, genuineness and creditworthiness of creditors - transactions through proper banking channels as evidence of genuineness - bank verification under section 133(6) of the Income-tax Act - Deletion of addition of Rs. 1.14 crores made by AO under section 68 on account of unsecured loans from five companies. - HELD THAT: - The Tribunal examined whether the assessee discharged the statutory onus to prove identity, genuineness and creditworthiness of the lender companies in respect of unsecured loans aggregating Rs. 1.14 crores. The assessee produced bank statements, income-tax returns, audited financial statements, ledger confirmations and affidavits for each lender. The AO had sought and received bank verification under section 133(6) and reported that no cash deposits preceded the issue of cheques to the assessee. Although the AO relied on an Inspector's field enquiry and a statement attributing entry-provider activity to a person said to be associated with the lenders, the CIT(A) and the Tribunal found no admission that the particular unsecured loans to the assessee were accommodation entries. The balance sheets demonstrated that each lender had funds or borrowings/liquid assets adequate to make the advances. The bank responses (including KYC, account opening records and statements) and the fact that transactions were routed through banking channels supported the genuineness and established the source of funds. Considering these materials in totality, the Tribunal concluded that the assessee discharged the onus under section 68 and that the AO's conclusion to the contrary was not justified on the facts of the case. [Paras 20, 21, 22, 23, 25]

Addition under section 68 deleted; appeal of the Revenue dismissed.

Final Conclusion: On the facts, the assessee established the identity, genuineness and source of the unsecured loans through documentary evidence and bank verifications; the addition under section 68 was rightly deleted by the CIT(A), and the Revenue's appeal is dismissed.

Disallowance under section 14A read with Rule 8D - Exempt-income nexus for 14A disallowance - Employees' Provident Fund and ESI contribution - timing of deposit and grace period - Deduction under section 10A - Deduction under section 80IB - Remand for verification of accounts

Disallowance under section 14A read with Rule 8D - Exempt-income nexus for 14A disallowance - Deletion of addition made under section 14A read with Rule 8D - HELD THAT: - The Tribunal followed the coordinate-bench finding in the assessee's earlier appeals for preceding years that no disallowance under section 14A/Rule 8D is leviable where the assessee did not earn any exempt income during the year; the coordinate bench relied on earlier authoritative decisions and deleted the addition. No distinguishing fact was shown in the present years; accordingly the Tribunal upheld deletion of the addition under section 14A/Rule 8D as recorded in the coordinate-bench order. [Paras 7, 8]

Addition under section 14A read with Rule 8D deleted; revenue's challenge rejected.

Employees' Provident Fund and ESI contribution - timing of deposit and grace period - Disallowance of EPF and ESI contribution for deposits made after the grace period - HELD THAT: - The Tribunal applied the decision of the Hon'ble High Court of Delhi (as referred to in the order) holding that employers' contribution to Provident Fund and ESI is allowable only if deposited within the statutory/grace period; where deposits were made after the grace period the amount cannot be allowed as deduction. In view of that precedent, the Tribunal allowed the revenue's ground disallowing the delayed contributions. [Paras 9]

Disallowance of EPF and ESI contributions sustained; appeal allowed in part for the revenue on this point.

Deduction under section 10A - Deduction under section 80IB - Remand for verification of accounts - Allowability of deductions under sections 10A and 80IB and whether matter should be remitted to Assessing Officer for verification - HELD THAT: - The Tribunal examined the coordinate-bench reasoning and documentary evidence considered by the CIT(A) (including head-office and eligible-unit accounts) and agreed with the finding that eligible units had not borrowed funds from the head office and had not borne financial charges requiring allocation. The Tribunal found no need to remit the matter to the AO for fresh verification since the CIT(A) had considered and examined the underlying facts; accordingly the earlier deletion/allowance of disallowance was sustained and the revenue's plea to restore the issue for verification was declined. [Paras 10, 11, 12]

Deductions under section 10A and section 80IB upheld for the assessee; remand to AO refused.

Final Conclusion: The revenue appeals were partly allowed: the disallowance of EPF/ESI contributions deposited after the grace period was sustained in favour of the revenue, while additions/disallowances under section 14A/Rule 8D and the claims under sections 10A and 80IB were deleted/upheld in favour of the assessee; remand to the Assessing Officer was refused.

Transactional Net Margin Method (TNMM) as the most appropriate method - Berry ratio as Profit Level Indicator (PLI) - Inapplicability of Comparable Uncontrolled Price (CUP) on account of product, volume and geographic dissimilarities - Bench marking of international transactions and determination of arm's length price - Remand to Transfer Pricing Officer for fresh examination and comparability analysis - Appeal allowed for statistical purposes

Transactional Net Margin Method (TNMM) as the most appropriate method - Berry ratio as Profit Level Indicator (PLI) - Inapplicability of Comparable Uncontrolled Price (CUP) on account of product, volume and geographic dissimilarities - Bench marking of international transactions and determination of arm's length price - TNMM with Berry ratio as the appropriate PLI is the correct methodology for bench marking the assessee's indenting/commission transactions for the years under consideration; CUP is not appropriate given dissimilarities between AE and non AE transactions. - HELD THAT: - Having examined the factual matrix and the Tribunal's earlier detailed findings for preceding assessment years, the Tribunal concluded that there are material dissimilarities between controlled transactions with the AE and uncontrolled transactions with non AEs in respect of products, volumes, values and geographic markets. CUP therefore requires a very high degree of similarity which is absent and cannot be applied. The assessee is a low risk service provider whose profits are driven by operating expenses rather than the value of goods; therefore the profit should be examined with reference to operating expenditure. In these circumstances, TNMM is the most appropriate method and the berry ratio (which captures returns on operating expenses where profits are driven by expenses rather than value of goods) is the suitable PLI. The Tribunal therefore directs that benchmarking be undertaken adopting TNMM with berry ratio as PLI and that the assessee be given due and effective opportunity to substantiate comparables and its margins. [Paras 5]

Set aside the transfer pricing determination and direct the TPO to re examine and benchmark the international transactions using TNMM with the berry ratio as the PLI, giving the assessee appropriate opportunity to substantiate its ALP.

Remand to Transfer Pricing Officer for fresh examination and comparability analysis - Appeal allowed for statistical purposes - The assessment adjustments challenged in the appeals are set aside and the matters remanded to the TPO for fresh consideration in accordance with the Tribunal's direction; the appeals are allowed for statistical purposes. - HELD THAT: - In view of the Tribunal's conclusion on the appropriate methodology and PLI, the impugned adjustments made by the AO/TPO (including substantive and protective adjustments premised on CUP or other approaches) cannot stand. The Tribunal, following its earlier reasoning in preceding years and observing no distinguishing factors for the second year, remitted both years to the TPO/AO for fresh benchmarking and examination in accordance with the directions, and treated the appeals as allowed for statistical purposes. [Paras 5, 6, 7, 8]

Both appeals are set aside and remanded for fresh consideration by the TPO/AO in accordance with the Tribunal's directions; the appeals are allowed for statistical purposes.

Final Conclusion: The Tribunal held that TNMM with the berry ratio as the PLI is the appropriate methodology for bench marking the assessee's indenting/commission transactions for AYs 2012 13 and 2013 14, found CUP inapplicable on the facts, remanded the matters to the TPO/AO for fresh examination and comparability analysis (with opportunity to the assessee), and allowed the appeals for statistical purposes.

Unexplained cash credit under Section 68 - identity, creditworthiness and genuineness of investors - onus on assessee and shifting burden to revenue upon prima facie establishment - reopening of assessment on formation of opinion of escapement - share premium quantum not determinative of genuineness

Unexplained cash credit under Section 68 - identity, creditworthiness and genuineness of investors - onus on assessee and shifting burden to revenue upon prima facie establishment - share premium quantum not determinative of genuineness - Deletion of addition of Rs. 13,25,00,000 made by assessing officer as unexplained cash credit was valid and liable to be sustained. - HELD THAT: - The Tribunal found that the assessee had produced extensive contemporaneous documentary evidence during reassessment proceedings - investor details including PAN and addresses, income-tax return acknowledgements, audited financial statements of the investors, share application forms, share certificates, board resolution, Form 2 filings and bank statements evidencing receipt through banking channels - thereby discharging the primary onus cast under the rigors of Section 68. The assessing officer's conclusions rested on a limited and belated inquiry: notices under section 133(6) were issued on a sample basis to three investors only, returned undelivered, and the AO did not pursue further inquiries at the new addresses provided or make broader investigations into the remainder of the investors. In those circumstances the Tribunal applied the established principle that once the assessee furnishes prima facie evidence of identity, creditworthiness and genuineness, the burden shifts to the revenue to adduce cogent material to negative those particulars; mere suspicion, conjecture or the fact of high share premium cannot, by itself, justify an addition. The Tribunal distinguished the facts of the cited Apex Court authority (Pr. CIT v. NRA Iron & Steel Pvt. Ltd.) and other adverse precedents on the ground that they involved much more extensive and adverse inquiries by the revenue (non-appearance of investors, field enquiries, absence of bank evidence, or indicia of non existence). The Tribunal also held that the quantum of share premium is a commercial decision between issuer and subscriber and, absent illegality or statutory restriction, does not ipso facto render the transaction non genuine. On the totality of evidence and applicable precedents, the Tribunal concluded that revenue failed to produce sufficient material to treat the receipts as the assessee's unexplained income. [Paras 5, 6]

The deletion of the addition under Section 68 is upheld and the revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the revenue's appeal for AY 2009-10, holding that the assessee had discharged the primary burden under Section 68 by producing adequate documentary evidence of identity, creditworthiness and genuineness, and that the revenue failed to produce cogent material to warrant addition; the high share premium alone did not justify treating the receipts as unexplained cash credit.

Addition under section 68 for unexplained cash credits - burden of proof on the assessee to explain the nature and source of credits - identity, creditworthiness and genuineness of creditors - use of disclosures before Income Tax Settlement Commission to explain investments - nexus between disclosure before Settlement Commission and investment in firm - remand for fresh consideration to the Assessing Officer

Addition under section 68 for unexplained cash credits - burden of proof on the assessee to explain the nature and source of credits - identity, creditworthiness and genuineness of creditors - Deletion of additions framed under section 68 in the hands of the firm was not justified on the basis given by the CIT(A). - HELD THAT: - The Tribunal recorded that when credits appear in the assessee's books, the assessee must prove identity, capacity and genuineness of the creditors and explain the source of receipts; if the explanation is not satisfactory the sum may be treated as the assessee's income. The Assessing Officer examined the partners' creditworthiness and found no matching withdrawals or sources on corresponding dates and allowed source where matching withdrawals existed. The CIT(A)'s sole basis that additions should be shifted to partners merely because partners were identified is contrary to the statutory scheme and cannot sustain deletion of the addition in the assessee's books. [Paras 8]

Tribunal held that the CIT(A)'s deletion cannot be sustained insofar as it rests on the view that identifiability of partners alone shifts the addition out of the firm; the Assessing Officer's approach examining source and creditworthiness is the correct statutory approach.

Use of disclosures before Income Tax Settlement Commission to explain investments - nexus between disclosure before Settlement Commission and investment in firm - remand for fresh consideration to the Assessing Officer - Whether disclosures and admissions made by partners before the Income Tax Settlement Commission satisfactorily explain the cash credits in the firm's books. - HELD THAT: - The Tribunal found material inconsistencies between the Settlement Commission's computations and the figures placed before the Tribunal by the assessee. The Settlement Commission's accepted disclosures also indicated investments in other group concerns, raising doubts about availability of those funds for the firm. Because the Assessing Officer had completed assessments without the benefit of the Settlement Commission's order, and because direct nexus and cash-flow evidence were not examined, the Tribunal directed a remand. The assessee was directed to furnish the Settlement Commission orders and cash-flow statements to demonstrate that disclosures accepted by the Commission were directly invested as capital/current account credits in the firm; the Assessing Officer is to verify the nexus, consider the Settlement Commission's computations, and adjust for any duplication of sources before giving credit. [Paras 8]

Issue remanded to the Assessing Officer for fresh consideration in light of the Settlement Commission's orders and cash-flow evidence, with directions to examine nexus and duplication before deciding credit in partners' accounts.

Final Conclusion: Tribunal found the CIT(A)'s deletion unsustainable as a matter of law on the basis that identifiability of partners alone displaces an addition under section 68; however, because of variations and lack of examination of Settlement Commission disclosures and cash-flow nexus, the matter is remanded to the Assessing Officer for fresh consideration after the assessee furnishes the Settlement Commission orders and supporting cash-flow documentation.

Burden of proof - genuineness of transactions - disallowance of expenditure on account of bogus sub-contractors - proportional disallowance as remedial adjustment - precedential effect of coordinate-bench decision

Burden of proof - genuineness of transactions - disallowance of expenditure on account of bogus sub-contractors - proportional disallowance as remedial adjustment - precedential effect of coordinate-bench decision - Whether the disallowance of payments made to alleged sub contractors should be 100% as held by the AO or restricted to 15% following the coordinate bench decision in the assessee's own earlier year. - HELD THAT: - The Tribunal found the factual matrix of AY 2011 12 and AY 2012 13 to be materially identical to the coordinate bench decision in the assessee's own case for AY 2008 09. That earlier decision recorded that the initial onus lay on the assessee and had been discharged by production of audited books, payment vouchers and other transaction particulars, while also acknowledging the possibility of inflated expenses; on that basis the coordinate bench exercised a remedial adjustment by disallowing 15% of the payments. Applying the precedent, the Tribunal held that despite the AO's adverse findings (including discovery of blank letter heads during survey and inability to produce parties for verification), the guiding principle and result of the earlier decision govern the present appeals. Consequently the Tribunal upheld the CIT(A)'s direction to restrict the disallowance to 15% of the total expenditure, rejecting the revenue's contention for full disallowance. [Paras 8, 9]

The CIT(A)'s order directing the AO to disallow 15% of the payments was upheld for both AY 2011 12 and AY 2012 13.

Final Conclusion: Both appeals filed by the revenue are dismissed and the CIT(A)'s directions to restrict the disallowance to 15% of the subcontractor payments for AY 2011 12 and AY 2012 13 are upheld, following the coordinate bench precedent in the assessee's earlier year.

Allowability of bank charges paid for processing working capital loan - application of Section 14A read with Rule 8D for disallowance of expenditure in relation to exempt income - precedential coverage by earlier High Court decisions

Allowability of bank charges paid for processing working capital loan - precedential coverage by earlier High Court decisions - Deletion of the disallowance of bank charges of Rs. 25,24,786/- paid for processing the working capital loan was upheld. - HELD THAT: - The revenue did not dispute that the question concerning the allowability of bank charges was covered by an earlier judgment of this Court in ITA No. 209 of 2015 decided on 26.8.2015. Having accepted that precedent governs the present controversy, the Court found no reason to deviate from the earlier decision and therefore upheld the deletion of the disallowance made by the Tribunal/CIT(A). [Paras 6, 7]

The deletion of the disallowance of bank charges was affirmed and the revenue's appeal in respect of this disallowance is dismissed.

Application of Section 14A read with Rule 8D for disallowance of expenditure in relation to exempt income - precedential coverage by earlier High Court decisions - Deletion of the disallowance under Section 14A read with Rule 8D (reduced to Rs. 2,84,91,705/- by the CIT(A)) was upheld. - HELD THAT: - Learned counsel for the revenue conceded that the question relating to the applicability of Section 14A read with Rule 8D was covered by this Court's decision in ITA No. 186 of 2013 decided on 6.9.2016. In view of that binding precedent, the Court declined to disturb the Tribunal's order which had deleted the disallowance to the extent recorded by the CIT(A), and dismissed the revenue's challenge on this point. [Paras 6, 7]

The deletion of the Section 14A/Rule 8D disallowance was affirmed and the revenue's appeal in respect of this disallowance is dismissed.

Final Conclusion: Both appeals filed by the revenue are dismissed as the questions raised are covered by earlier decisions of this Court; the Tribunal's deletions of the specified disallowances are therefore sustained.

Penalty under Section 271(1)(c) - transfer pricing adjustment - advertisement and marketing promotion (AMP) expenses as international transaction - Bright Line Test - application of precedent from assessee's own case

Penalty under Section 271(1)(c) - transfer pricing adjustment - advertisement and marketing promotion (AMP) expenses as international transaction - application of precedent from assessee's own case - Sustainability of penalty imposed under Section 271(1)(c) in respect of transfer pricing addition on AMP expenditure. - HELD THAT: - The Tribunal examined whether penalty u/s 271(1)(c) could be sustained when the underlying transfer pricing adjustment treated AMP expenditure as a separate international transaction. The assessment-year facts and the method of applying the Bright Line Test in the year under consideration mirror those in the assessee's own case for AY 2010 11, where the Hon'ble Delhi High Court held that AMP/sales promotion expenses were not a separate and independent international transaction but constituted functions performed by the assessee engaged in marketing and distribution. Given that the Department did not point to distinguishing facts between AY 2009 10 and AY 2010 11, the Tribunal applied that precedent mutatis mutandis and held the transfer pricing adjustment to be unsustainable. Because the penalty was levied in respect of that adjustment, the Tribunal found the penalty could not be sustained. The Tribunal declined to decide the separate contention on procedural defects in the notice under section 274, treating the substantive conclusion on non-existence of a separate international transaction as dispositive of the penalty issue.

Penalty imposed under Section 271(1)(c) in respect of the transfer pricing adjustment on AMP expenditure is set aside and directed to be deleted.

Final Conclusion: Following the Hon'ble Delhi High Court's decision in the assessee's own case for AY 2010 11 that AMP expenses are not a separate international transaction, the Tribunal held the transfer pricing addition unsustainable and deleted the penalty under Section 271(1)(c) for AY 2009 10; appeal allowed.

Rectification of order - mistake apparent on record - review of appellate order not permissible under section 254(2) - exclusion of shares held as stock-in-trade for computation of disallowance under Section 14A r.w. Rule 8D

Rectification of order - mistake apparent on record - review of appellate order not permissible under section 254(2) - exclusion of shares held as stock-in-trade for computation of disallowance under Section 14A r.w. Rule 8D - Miscellaneous application seeking rectification of the ITAT order to exclude shares held as stock-in-trade while computing disallowance. - HELD THAT: - The applicant sought rectification of the Bench's order in ITA No.680/M/2016 (A.Y.2010-11) on the ground that shares held as stock-in-trade ought to have been excluded while computing the disallowance under the provision relied upon, and that omission was a mistake apparent on record. The Bench noted that the substantive controversy in the appeal had been adjudicated on merits and that permitting the proposed rectification would effectively amount to a review of the appellate decision. Change on merits is not permissible under section 254(2) and the procedure for rectification cannot be used to reopen or alter the merits of the decision. On that basis, the Bench found no jurisdiction to grant the relief sought and that the miscellaneous application did not deserve allowance. [Paras 3]

Miscellaneous application dismissed.

Final Conclusion: Application for rectification to exclude shares held as stock-in-trade from the disallowance computation was dismissed on the ground that the relief sought would amount to a review of the appellate decision, which is impermissible under section 254(2).

Dismissal for short payment of fee - requirement of payment of prescribed fee for filing a revision petition - procedural fairness in raising defects at the hearing - rehearing after setting aside a procedural dismissal

Dismissal for short payment of fee - procedural fairness in raising defects at the hearing - requirement of payment of prescribed fee for filing a revision petition - Whether the Revisionary Authority was justified in dismissing the revision petition solely on the ground of short payment of the requisite fee when the petitioner had been heard on merits without being informed of the defect. - HELD THAT: - The Court noted that the petitioner initially tendered a fee of Rs. 200 and subsequently deposited a challan for the balance of Rs. 800 on 24 October 2016, which the petitioner says was accepted. Although the respondent disputed receipt of the balance in its records, the Revisionary Authority had heard the petitioner on merits on 16 July 2018 without pointing out any short payment. In these circumstances the Court held that dismissal of the petition on such a technical ground, when the defect was not raised at the time of the merits hearing, was not appropriate. The impugned order dismissing the revision petition on the sole basis of short payment was therefore set aside and the matter was directed to be reheard. The Court further directed procedural accommodation - the petitioner to produce a demand draft/challan for the balance fee when he appears before the Authority and the Authority to accept it without dismissing the petition only on the earlier non-payment, after which the Authority shall hear and decide the petition on merits within a specified time-frame. [Paras 4, 5]

Impugned order dated 4th September 2018 set aside; petitioner to appear on 1st July 2019 with demand draft/challan for the balance fee which shall be accepted, and the Revisionary Authority to hear and decide the revision petition on merits within three months thereafter; petition shall not be dismissed solely on the ground of earlier non-payment of Rs. 800.

Final Conclusion: The High Court set aside the dismissal of the revision petition that was founded only on an alleged short payment of fee, directed acceptance of the balance fee upon rehearing, and ordered that the Revisionary Authority decide the petition on merits within three months after rehearing.

Redetermination of customs valuation - Valuation Rule 9 residual method - Mis-declaration and camouflage of imported goods - Confiscation under Section 111(m) of the Customs Act, 1962 - Confiscation under Section 119 of the Customs Act, 1962 - Penalty under Section 112(a) of the Customs Act, 1962 - High seas sale and bona fide purchase defence

Redetermination of customs valuation - Valuation Rule 9 residual method - High seas sale and bona fide purchase defence - Validity of re-determination of value of imported goods under Rule 9 and the rejection of the appellant's defence of bona fide high seas purchase. - HELD THAT: - The Tribunal upheld the Commissioner's re-determination of value. The container scanning and SIIB examination established that the consignment consisted primarily of serviceable steel plates camouflaged as scrap. The Commissioner adopted Rs. 40/kg as indicative international market price; while not identical/absolute value for identical goods, that price was a permissible basis under Rule 9 as a residual method using reasonable means consistent with the Rules and not exceeding ordinary international trade price. The appellant's plea that the Bill of Entry was filed on the basis of high seas invoices did not excuse personal inspection or rebut the examination findings, and the appellant admitted the examination report. There was therefore no irregularity in applying Rule 9 and loading value on the declared consignment. [Paras 5]

Re-determination of value under Rule 9 was valid and the appellant's defence of bona fide high seas purchase was rejected.

Mis-declaration and camouflage of imported goods - Confiscation under Section 111(m) of the Customs Act, 1962 - Confiscation under Section 119 of the Customs Act, 1962 - Penalty under Section 112(a) of the Customs Act, 1962 - Whether the goods were liable for confiscation and the appellant liable for penalty under the cited provisions. - HELD THAT: - The Commissioner's findings that 28,000 Kg of HRMS plates were misdeclared and liable to confiscation under Section 111(m), and that 81,780 Kg were camouflaged and liable under Section 119, were supported by scanning, dock and SIIB examinations and the absence of a plausible explanation from the appellant. Given the established mis-declaration and camouflage, imposition of penalty under Section 112(a) was sustained. The Tribunal found no illegality or irrationality in these findings and the consequent measures imposed by the Commissioner. [Paras 6]

Findings of mis-declaration and camouflage justified confiscation under Sections 111(m) and 119 and imposition of penalty under Section 112(a); the Commissioner's orders were upheld.

Final Conclusion: The appeal is dismissed and the Order-in-Original No. 86/2009-CC(Import), JNCH dated 28.04.2009 is confirmed.

Imposition of penalty under Section 112 of the Customs Act, 1962 - Interest under Section 28AB of the Customs Act, 1962 - Effect of payment of duty before issuance of show cause notice on imposition of penalty - Obligation to dispose all proposals contained in a show cause notice

Imposition of penalty under Section 112 of the Customs Act, 1962 - Effect of payment of duty before issuance of show cause notice on imposition of penalty - Whether the adjudicating authority's order on imposition of penalty under Section 112 is sustainable or requires fresh consideration in view of internal contradictions in findings. - HELD THAT: - The Tribunal found that the Commissioner's order contains contradictory findings: Para 47 records that penalty is not imposable because duty was paid before issuance of the show cause notice and in view of cited case law, whereas Para 49(a) and (b) records that the EOU and its director were liable for penalty under Section 112 because goods were illicitly cleared and sold, and thus liable to confiscation. The Tribunal held that such contrary findings in the adjudicating order produce an error, because the operating portion (Para 50 clauses (iv) and (v)) is inconsistent with the reasoning in the body of the order. Given this conflict, the Tribunal concluded that the issue of imposition of penalty under Section 112 cannot be regarded as finally and coherently adjudicated and therefore must be remanded for fresh decision by the Adjudicating Authority. [Paras 5, 7]

Remand for fresh adjudication limited to the question of penalty under Section 112 of the Customs Act, 1962.

Interest under Section 28AB of the Customs Act, 1962 - Obligation to dispose all proposals contained in a show cause notice - Whether the adjudicating authority erred by not passing an operative order on the proposal for recovery of interest under Section 28AB. - HELD THAT: - The Tribunal noted that the Commissioner, in Para 48 of the impugned order, recorded a finding that duty had been voluntarily paid prior to issuance of the show cause notice and therefore recovery of interest under Section 28AB was not warranted. Despite this clear finding, the operating portion of the order (Para 50) is silent and does not record any decision on the proposal for interest made in the show cause notice. The Tribunal emphasised the legal obligation of the adjudicating authority to pass an express order on each proposal contained in the show cause notice and held that silence in the operative portion on the interest demand is an error requiring corrective action. [Paras 6]

Remand for express adjudication and passing of a reasoned order on the proposal for recovery of interest under Section 28AB of the Customs Act, 1962.

Final Conclusion: Appeals allowed. Matter remanded to the Adjudicating Authority to pass a fresh, reasoned order limited to (a) the question of imposition of penalty under Section 112 of the Customs Act, 1962, addressing and reconciling the contradictory findings; and (b) the proposal for recovery of interest under Section 28AB, by expressly disposing of that proposal in the operative portion of the order.

Voluntary winding up - final meeting and final return under Section 497(6) of the Companies Act, 1956 - Official Liquidator's report under Rule 9 of the Companies (Court) Rules, 1959 - dissolution of company upon taking final return on record - no-due certificate under Section 178 of the Income Tax Act, 1961

Final meeting and final return under Section 497(6) of the Companies Act, 1956 - dissolution of company upon taking final return on record - Official Liquidator's report under Rule 9 of the Companies (Court) Rules, 1959 - no-due certificate under Section 178 of the Income Tax Act, 1961 - Final return filed by liquidator under Section 497(6) taken on record and order of dissolution of the company - HELD THAT: - The Official Liquidator filed the report under Rule 9 of the Companies (Court) Rules, 1959 and examined the liquidator's final return prepared pursuant to the voluntary winding up. The report records that the final meeting of members required by Section 497 was held on 27.04.2018, the final statement of account was placed and explained, and a unanimous special resolution approving the accounts and instructing the liquidator to send returns to the Registrar and Official Liquidator was passed. The Official Liquidator was satisfied that the affairs of the company had not been conducted in a manner prejudicial to members or the public interest. A no-due certificate from the Income Tax Department under Section 178 of the Income Tax Act, 1961 was produced. Having regard to these materials and the fulfillment of the requirements of Section 497(6), the final return was taken on record and the petition for dissolution was allowed.

Final return taken on record and the company under liquidation is directed to stand dissolved.

Final Conclusion: The application by the Official Liquidator is allowed; the final return is taken on record and M/s Jyothi Sheel Textile Company Private Limited is dissolved.

Restoration of company name - striking off under section 248 of the Companies Act - statutory exceptions to removal of name where legal or administrative action is pending - continuing liability of directors after striking off - CBDT circular permitting departmental appeals for restoration where tax proceedings are pending - publication and procedural conditions for restoration - limitation exclusion under Sections 12 to 15 of the Limitation Act read with Section 433 of the Companies Act

Restoration of company name - striking off under section 248 of the Companies Act - statutory exceptions to removal of name where legal or administrative action is pending - CBDT circular permitting departmental appeals for restoration where tax proceedings are pending - publication and procedural conditions for restoration - limitation exclusion under Sections 12 to 15 of the Limitation Act read with Section 433 of the Companies Act - Restoration of the name of M/s. Swaroop Health Care Pvt. Ltd. struck off by the Registrar of Companies, to enable pending income-tax and other regulatory proceedings to continue. - HELD THAT: - The Tribunal examined the Income Tax Department's contention that reassessment proceedings for AY 2011-12 (relevant FY 2010-11) have been reopened on account of alleged escapement of income and that striking off the company's name would frustrate those proceedings. The Tribunal noted the policy guidance in the CBDT circular permitting departmental applications for restoration where tax proceedings are in progress or contemplated, and the Ministry of Corporate Affairs' circulars on revival procedures and DIN reactivation. The Tribunal also relied on the Companies (Removal of Names...) Rules, 2016 which carve out categories (including where inspection, investigation or prosecution is pending) in which names should not be removed. The proviso to Section 248(7) was held to preserve liabilities of directors despite striking off. Balancing public interest and the protection of revenue, the Tribunal found that, because a conscious administrative decision for reassessment had been taken and legal/administrative action was pending or contemplated, the company's name ought to be restored so that statutory action by the Income Tax Department and other authorities may proceed. The Tribunal therefore allowed restoration subject to the Registrar being directed to restore the name on compliance with publication in two newspapers and the Official Gazette in a draft approved by the ROC, at the petitioner's cost. The Tribunal further directed that the period consumed in these proceedings be excluded for purposes of limitation under Sections 12 to 15 of the Limitation Act read with Section 433 of the Companies Act, 2013, so as to permit initiation or continuation of Income Tax and other legal proceedings. [Paras 17, 18, 19, 20, 21]

The appeal is partly and conditionally allowed; the Registrar of Companies, Ahmedabad is directed to restore the company's name on the register subject to publication in two newspapers and the Official Gazette at the petitioner's cost, and the time consumed in these proceedings is excluded for limitation purposes as directed.

Final Conclusion: The Tribunal directed restoration of M/s. Swaroop Health Care Pvt. Ltd.'s name in the ROC register to enable pending income-tax and other regulatory proceedings, subject to specified publication conditions and with exclusion of the time consumed in these proceedings for limitation purposes.

Interim relief - operation of order kept in abeyance - modification of interim order - time to prefer appeal - top-up and margin calls

Operation of order kept in abeyance - interim relief - time to prefer appeal - Application for keeping in abeyance the operation of order dated 15.03.2019. - HELD THAT: - The Tribunal noted earlier directions dated 21.12.2018 and 21.01.2019 concerning pledging of shares and limitations to pledge only for top-up or margin calls in respect of already pledged shares. The interim orders and related applications were disposed of by the order dated 15.03.2019 which modified the earlier interim order. Petitioners stated their intention to prefer an appeal against the order dated 15.03.2019 and highlighted imminent holidays. In view of these circumstances and the petitioners' intention to appeal, the Tribunal exercised its discretion to preserve the status quo by keeping the operation of the impugned order in abeyance for a limited period to enable the petitioners to take necessary steps.

Order dated 15.03.2019 shall remain in abeyance for seven working days from the date of this order.

Final Conclusion: The application for interim relief is allowed to the extent that the operation of the order dated 15.03.2019 is kept in abeyance for seven working days; CA No.167/2019 disposed.

Tribunal's power to pass interim orders under Section 242(4) - modification of interim orders - status quo injunction - maintainability of a company petition under Sections 241, 242 & 244 - impact of interim relief on company's business operations

Modification of interim orders - status quo injunction - impact of interim relief on company's business operations - Tribunal's power to pass interim orders under Section 242(4) - Whether the interim order dated 12th December, 2018 should be modified to limit the prohibition on dealing with the company's assets - HELD THAT: - This Appellate Tribunal noted that the Tribunal and the Appellate Tribunal possess power to pass interim orders regulating the conduct of the company's affairs under the statutory scheme, specifically by reference to the Tribunal's power under Section 242(4). The interim order of 12th December, 2018 had imposed a wide prohibition against taking steps to sell movable or immovable property of the company, which, if left unmodified, would effectively halt the company's normal business of real estate development and prevent carrying out routine transactions (including dealing with movable assets and allotments). The appellants had not sought an across-the-board stay of all asset transactions but the order had been prompted by the petitioner's allegation of an intended sale of the Chembur land. Balancing the protective object of a status quo order against the prejudice of stopping the company's operations, the Tribunal's broad stay was recalled and modified so that the prohibition would be limited to sale of the Chembur Land without prior permission of this Appellate Tribunal or until final disposal of the appeals. [Paras 11, 12, 13, 14, 16]

Interim order dated 12th December, 2018 recalled and modified: parties restrained from selling the Chembur Land without prior permission of this Appellate Tribunal or till final decision of the appeals; I.A. No. 2051 of 2018 disposed of.

Maintainability of a company petition under Sections 241, 242 & 244 - Whether the Appellate Tribunal will decide the maintainability of the Company Petition at this stage - HELD THAT: - The Appellate Tribunal expressly refrained from deciding the question of maintainability of the petition under Sections 241, 242 & 244 of the Companies Act, 2013 at this stage. It recorded that the question of maintainability is to be determined in the main appeals after hearing the parties; consequently, no determination on the effect of an earlier High Court status quo order was made. [Paras 5, 11]

Maintainability of the Company Petition is not decided and is to be determined in the main appeals after hearing the parties.

Final Conclusion: The Appellate Tribunal modified the interim order of 12th December, 2018 by limiting the prohibition to sale of the Chembur Land without prior permission of this Appellate Tribunal or until final disposal of the appeals; the question of maintainability of the Company Petition is left for determination in the main appeals.

Avoidance of undervalued transactions - preferential transactions - duty to co-operate of promoters/directors with liquidator - powers of liquidator to recover benefits - exercise of section 48(1)(c), 43 and 45 of the I&B Code in liquidation

Duty to co-operate of promoters/directors with liquidator - section 19(3) of the I&B Code - Promoters and ex-directors must comply with directions of the liquidator and co-operate in collection of information and completion of liquidation proceedings. - HELD THAT: - The Bench found persistent non-cooperation by the promoters/directors during CIRP and noted absence of any reply or defence to the application. In view of the recorded conduct, the Bench exercised its power to ensure effective liquidation by directing ex-promoters/directors to comply with the liquidator's instructions and to assist in collection of information and management relevant to completion of liquidation proceedings. [Paras 31, 32]

Order made under section 19(3) directing the ex-promoters/directors to co-operate with the liquidator.

Avoidance of undervalued transactions - section 45(2)(b) of the I&B Code - powers of liquidator to recover benefits - A transaction involving transfer of assets (stock/job sales) to a related party without receipt of consideration was held to be an undervalued transaction and the related party was directed to pay the benefit received to the liquidator. - HELD THAT: - The forensic audit and the liquidator's review established that job sales for the benefit of a related party were not routed through the corporate debtor's bank accounts and consideration was not received, meaning the transfer was not in the ordinary course of business and the consideration received by the transferee was significantly less than the value provided by the corporate debtor. Exercising jurisdiction under section 48(1)(c) and on the basis of section 45(2)(b), the Bench directed the related party (Respondent No.7) to pay the identified amount to the liquidator. [Paras 10, 33, 34]

Respondent No.7 ordered to pay Rs. 3,31,56,980/- to the liquidator as benefit received from an undervalued transaction.

Preferential transactions - section 43 of the I&B Code - section 44(1)(d) - requiring persons to pay sums in respect of benefits received - Various transactions identified by the forensic audit were held to be preferential transactions and the respondents involved were directed to return or pay back the benefits received. - HELD THAT: - The Bench analysed ledger entries, bank records and forensic audit findings and concluded that multiple transfers and adjustments in favour of related parties were not made in the ordinary course of business and satisfied the criteria of section 43 for preference. Relying on section 44(1)(d), the Bench allowed the liquidator's prayers in respect of the transactions described in paras 15, 18, 20, 22, 24, 26 and 28 and required the respondents to pay/return the sums representing benefits received. The Bench also warned of penal consequences under sections 70-73 for non-compliance. [Paras 26, 28, 35, 36, 37]

Transactions held to be preferential; respondents directed to return the syphoned sums and to revert benefits received; failure to comply may attract penal action under sections 70-73.

Final Conclusion: The miscellaneous application is allowed. Ex promoters/directors are directed to co operate with the liquidator; an undervalued transaction to Respondent No.7 is set aside and Respondent No.7 is ordered to pay the identified sum to the liquidator; multiple transactions are held to be preferential and the concerned respondents are directed to return/pay the benefits received, with penal consequences warned for non compliance.

Refund of service tax on specified services used for export - eligibility under Notification No. 52/2011 ST - definition of "exporter" under Section 2(20) of the Customs Act, 1962 - export through canalised agency / MMTC as intermediary - back to back contracts and FOB basis title transfer - Government trade policy restricting export channels - Daruka principle on channelized export policy

Refund of service tax on specified services used for export - eligibility under Notification No. 52/2011 ST - definition of "exporter" under Section 2(20) of the Customs Act, 1962 - export through canalised agency / MMTC as intermediary - back to back contracts and FOB basis title transfer - Claim for refund of service tax paid on specified services used for export was admissible to the appellant even though exports were effected through MMTC and shipping documents/BRCs were in MMTC's name. - HELD THAT: - The Tribunal found that the exports of manganese ore were subject to a policy restriction requiring canalization through MMTC, a restriction traceable to import export control law and the Foreign Trade Policy. The contractual matrix disclosed back to back arrangements in which the appellant supplied the goods, performed port and related services necessary for export, and expressly indemnified MMTC; MMTC's role was therefore that of an intermediary/commission agent compelled by policy. The Refund Sanctioning Authority had recorded that the appellant (i) did not take CENVAT credit for the specified services, (ii) produced invoices certified and correlated to the exports, (iii) realized payment in foreign exchange, and (iv) satisfied the definition of 'exporter' within the port area under Section 2(20) of the Customs Act and the Foreign Trade Policy. Applying the principle that channelization by policy does not defeat legitimate claims (as explained in Daruka & Co.), the Tribunal concluded that the conditions of Notification No. 52/2011 ST were met and the service tax paid on the specified services was refundable. [Paras 5, 7, 9, 10]

The refund sanctioned by the Refund Sanctioning Authority was correctly granted and is upheld; the appellant is entitled to the refund under Notification No. 52/2011 ST.

Final Conclusion: Appeal allowed; the Tribunal upholds the refund sanction as conforming to Notification No. 52/2011 ST, holding that policy mandated export through MMTC did not preclude the appellant's entitlement as exporter and did not defeat the refund claim.

Club or Association Service - service tax liability on membership fee - mutuality of interest - retrospective exemption from service tax - interest and penalties consequential on demand

Service tax liability on membership fee - Club or Association Service - mutuality of interest - Whether the Federation of Andhra Pradesh Chambers of Commerce & Industry was liable to pay service tax on membership/subscription fees for the period 01.10.2005 to 30.09.2008. - HELD THAT: - The Tribunal found that the Federation is a not for profit company registered under the Companies Act and that the organisation and the payments by members arise from mutuality of interest. Applying the binding High Court precedents relied upon by the assessee - Ranchi Club Limited and Sports Club of Gujarat Limited - the Tribunal held that where services are rendered by a club/association to its members who are not distinct recipients but part of the mutual entity, such transactions do not fall within the remit of Club or Association Service and do not attract service tax. In view of these authorities and the factual similarity of the Federation's case, the Tribunal concluded that no service tax was leviable for the entire disputed period. [Paras 7]

No service tax leviable on membership/subscription fees for 01.10.2005 to 30.09.2008; assessee's appeal allowed on this ground.

Retrospective exemption from service tax - interest and penalties consequential on demand - Whether the demand of interest and the imposition of penalties sustained in respect of the disputed membership fees. - HELD THAT: - The Tribunal noted the retrospective statutory provision enacted by insertion of a special exemption (effective 08.04.2011) which exempts membership fees collected by clubs/associations formed to represent industry or commerce for the period up to 31.03.2008 and provides for refunds. Even aside from the statutory amendment, the Tribunal's conclusion that the transactions fall within mutuality of interest meant that the original demand itself did not sustain. Consequently, interest under the relevant provisions and penalties imposed by the lower authorities could not be sustained. The Tribunal therefore set aside interest and penalties relating to the entire disputed period as consequential to the primary finding on service tax liability. [Paras 7, 8]

Demand of interest and penalties set aside; Department's appeal rejected and assessee granted consequential relief.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that subscription/membership fees were not subject to service tax for 01.10.2005 to 30.09.2008 due to mutuality and applicable precedents (and noting the retrospective exemption up to 31.03.2008), and consequently set aside the demand of interest and the penalties; the Department's cross appeal was rejected.

Retrospective restoration of exemption for services to Government - refund of service tax paid during period of subsequent exemption - unjust enrichment and passing on of tax burden - applicability of Section 11B(2) to amounts which are mere deposits in excess - refund claim initiated at instance of service recipient (Government) and obligation to repay - remand for reconsideration with joinder of service recipient as co-applicant

Retrospective restoration of exemption for services to Government - refund of service tax paid during period of subsequent exemption - Whether services rendered to MES fell within the exemption restored retrospectively and the amounts paid as service tax during the specified period amounted to excess deposits refundable - HELD THAT: - The Tribunal held that services provided to MES, a Governmental authority, were within the class of services intended to be exempted. By virtue of the Finance Act, 2016 (inserting entry 12A and Section 102), the exemption was restored with retrospective effect from 01.04.2015. The amendment was construed as restoring the prior exemption rather than creating a substantive new charge; the legislative intent to give retrospective effect was noted and applied. Consequently, amounts paid as service tax during the period from 1st April, 2015 to 29th February, 2016 ceased to be duty and became deposits in excess which were refundable. [Paras 6, 7, 8]

Services to MES held to be retrospectively exempt and the tax paid during the period specified constituted excess deposit liable to refund.

Unjust enrichment and passing on of tax burden - applicability of Section 11B(2) to amounts which are mere deposits in excess - refund claim initiated at instance of service recipient (Government) and obligation to repay - Whether the refund could be denied on the ground of unjust enrichment where the appellants had been reimbursed by MES and had declared willingness to return the refunded amount - HELD THAT: - The Tribunal found that Section 11B(2) deals with recovery of duty paid and is inapplicable where the amount paid is no longer a duty but merely an excess deposit rendered refundable by retrospective exemption. Further, two factual features weighed against treating the appellants as unjustly enriched: (i) the refund claim was initiated at the request of the service recipient, MES (a Government department), and (ii) the appellants had furnished an affidavit undertaking to return any refund to MES. Given these facts, rejecting the refund solely because the burden had been borne by MES would produce an anomalous result of causing loss to the Government-department which sought the refund. The Commissioner (Appeals)'s conclusion of unjust enrichment was therefore held to be legally unsustainable on the record. [Paras 9, 10, 11]

Denial of refund on the ground of unjust enrichment was not sustainable; Section 11B(2) did not apply to the excess deposit created by retrospective exemption.

Remand for reconsideration with joinder of service recipient as co-applicant - Whether the matter should be remanded for reconsideration and the procedure to be followed for sanctioning the refund - HELD THAT: - Although the Tribunal set aside the finding of unjust enrichment and held the amounts refundable in principle, it directed a limited remand for administrative reconsideration. The Tribunal instructed that the proceedings be placed before the Assistant Commissioner for reconsideration without disturbing findings on allowability, and directed that MES pursue the refund by joining as co-applicant; if MES joins within one month, the competent authority must decide the application within one month thereafter. This remand is for limited procedural and adjudicatory action to process the refund in accordance with the Tribunal's legal conclusions. [Paras 12, 13]

Matter remanded to Assistant Commissioner for reconsideration; MES to join as co-applicant and competent authority to decide within the prescribed time.

Final Conclusion: The Commissioner (Appeals)'s orders rejecting the refund on the ground of unjust enrichment are set aside. The Tribunal held that services to MES were retrospectively exempt for the period from 1st April, 2015 to 29th February, 2016 and the tax paid in that period constituted refundable excess deposits; Section 11B(2) was inapplicable. The matters are remanded to the Assistant Commissioner for reconsideration with MES to join as co-applicant and the competent authority directed to decide the applications within the stipulated timelines.

Works Contract Service - Commercial or Industrial Construction service - classification of composite work contract - temporal applicability of service tax - CCE vs. Larsen and Toubro Ltd.

Works Contract Service - classification of composite work contract - temporal applicability of service tax - Whether the construction of platform at Bittan market undertaken by the appellant qualifies as a Works Contract Service and whether service tax is leviable for work executed prior to 01.06.2007. - HELD THAT: - The Tribunal found on the record that the work order awarded on 21.06.2005 and completed on 15.11.2006 involved both supply of goods and materials as well as labour and service elements, thereby amounting to a composite or works contract. Relying on the Supreme Court decision in CCE vs. Larsen and Toubro Ltd. , the Tribunal applied the principle that contracts involving transfer of property in goods together with service and labour qualify as Works Contract Service. Since the statutory levy of service tax on Works Contract Service came into effect only from 01.06.2007, the construction activity undertaken by the appellant prior to that date did not attract service tax under that category. The Tribunal therefore concluded that the demand under section 73(1) confirming service tax for the stated work was not sustainable. [Paras 6, 7, 8]

The construction activity qualifies as Works Contract Service and no service tax was leviable for the work executed prior to 01.06.2007; the impugned order-in-appeal is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the construction contract for the Bittan market platform was a composite works contract and that service tax on Works Contract Service was not leviable for the work carried out prior to 01.06.2007.

Renting of Immovable Property Services - exclusion of renting by or to a religious body - exemption to services by an entity registered under Section 12AA by way of charitable activities - longer period of limitation and bona fide belief vs. mala fide evasion - penalty for failure to pay service tax

Renting of Immovable Property Services - exclusion of renting by or to a religious body - exemption to services by an entity registered under Section 12AA by way of charitable activities - Whether renting of shops by the society in the Masjid precincts is covered by the exclusion for renting by/to a religious body or exempt as a charitable activity under the Mega Notification. - HELD THAT: - The appellant is a society registered under the Societies Registration Act and registered under Section 12AA as a charitable entity, but it is not a religious body. The definition of 'Renting of Immovable Property' (pre-June 2012) excludes renting by or to a religious body; however the shops were let out by the society and not by the Mosque as a religious body, and mere maintenance of the Mosque by the society does not convert the society into a religious body. The Mega Exemption Notification No.25/2012 grants relief to services provided by an entity registered under Section 12AA by way of charitable activities; the exemption applies to services that are themselves charitable activities. Renting of immovable property does not qualify as a charitable activity for the purpose of that Notification. Consequently the lower authorities were correct in rejecting the appellant's claim that the renting activity was excluded or exempted. [Paras 4]

Renting of the shops by the society is not excluded as renting by/to a religious body and is not covered by the charitable-services exemption; therefore service tax liability on the renting activity is not barred on these grounds.

Longer period of limitation and bona fide belief vs. mala fide evasion - Whether the demand for service tax for the period 2009-10 to 2013-14 invoking the longer period of limitation is sustainable. - HELD THAT: - Revenue invoked the longer period to recover service tax for 2009-10 to 2013-14. The Tribunal found that the issue involved a bona fide question of interpretation and the appellant could reasonably have believed that no tax was payable. Revenue failed to produce positive evidence of mala fide or deliberate evasion by the appellant. In the absence of such evidence, the demand insofar as based on the longer period is hit by the bar of limitation. However, portions of the demand that fall within the limitation period remain leviable and require quantification. [Paras 5]

Demand raised by invoking the longer period is barred by limitation due to the bona fide nature of the issue; the matter is remanded to the original adjudicating authority to quantify the portion of demand that falls within the limitation period.

Penalty for failure to pay service tax - longer period of limitation and bona fide belief vs. mala fide evasion - Whether penalties imposed on the appellant are justified. - HELD THAT: - Having held that there was no evidence of mala fide conduct and that the appellant entertained a bona fide belief regarding tax liability, the Tribunal concluded that penal consequences are not warranted. Penalties imposed under various provisions were therefore set aside. [Paras 6]

Penalties imposed upon the appellant are quashed.

Final Conclusion: The Tribunal held that renting of shops by the society in Masjid premises is not excluded as renting by/to a religious body nor exempt as a charitable service; the demand insofar as based on the longer period is barred by limitation (with remand for quantification of the part within limitation), and all penalties imposed are set aside.

Refund of wrongly collected service tax - burden of proof and documentary production by recipient - departmental verification from service provider and bank records - irrelevance of service provider's cenvat credit non-compliance for recipient's refund claim - remand for reprocessing of refund claim

Refund of wrongly collected service tax - burden of proof and documentary production by recipient - The appellants, as buyers who produced receipts and a certificate from the builder showing service tax was paid and collected, are prima facie entitled to refund of the service tax borne by them. - HELD THAT: - The Tribunal found that the documents furnished by the appellants - receipts and a certificate from the service provider declaring that service tax was paid and collected - sufficiently establish that the appellants bore the service tax liability. The appellants cannot be required to produce records that are in the control of the service provider. Given the material before the adjudicating authority, the appellants are prima facie entitled to have their refund claims considered on merits.

Appellants are prima facie entitled to refund and their claims must be reprocessed by the adjudicating authority.

Departmental verification from service provider and bank records - irrelevance of service provider's cenvat credit non-compliance for recipient's refund claim - remand for reprocessing of refund claim - The adjudicating authority cannot reject the refund claims solely for want of documents lying with the service provider; verification may be effected through bank statements and by obtaining information from the service provider's jurisdictional officer, and alleged cenvat credit irregularities of the service provider are not a ground to refuse the appellants' refund claims. - HELD THAT: - The Tribunal held that the sanctioning authority may verify the appellants' payment through the appellants' bank statements and may obtain necessary confirmation or records from the jurisdictional Service Tax Officer of the service provider. Refusal of refund on the ground that the service provider may have availed cenvat credit or failed to comply with Rule 6 of the Cenvat Credit Rules, 2004 is not relevant to deny the appellants' refund, because assessment or compliance issues pertaining to the service provider must be addressed by the jurisdictional officer in proceedings against that provider and cannot justify rejecting the recipient's refund claim. In light of these procedural and substantive directions, the matter requires reconsideration by the original authority.

Impugned orders set aside and the matters remanded to the adjudicating authority to reprocess the refund claims in accordance with the observations made.

Final Conclusion: Impugned orders are set aside; appeals are allowed by way of remand and the adjudicating authority is directed to reprocess the appellants' refund claims, verifying payments through bank records and departmental channels and without rejecting claims on the sole ground of the service provider's alleged cenvat non-compliance.

Sale of goods versus provision of service - service tax liability on sale of internet/SIM cards - invocation of a charge not proposed in the show cause notice - Section 73(A) not in force at the relevant time

Invocation of a charge not proposed in the show cause notice - Section 73(A) not in force at the relevant time - Whether the Commissioner (Appeals) could confirm recovery under Section 73(A) when the SCN proposed demand only under Section 73(1) and Section 73(A) was not in force during the relevant period. - HELD THAT: - The Tribunal noted that the SCN proposed demand under Section 73(1) alone while the Commissioner (Appeals) confirmed recovery under Section 73(A). There was no proposal in the SCN to recover under Section 73(A), and a provision not pleaded in the SCN cannot be invoked subsequently in the adjudicating or appellate order. Further, Section 73(A) was not in force during the relevant period April, 2005 to August, 2005, having been inserted later w.e.f. 18.04.2006. In those circumstances the Commissioner (Appeals) ought not to have invoked Section 73(A) for recovery. [Paras 5]

Confirmation of recovery under Section 73(A) set aside as impermissible because it was neither proposed in the SCN nor in force during the relevant period.

Sale of goods versus provision of service - service tax liability on sale of internet/SIM cards - Whether the demand for service tax on sale of internet cards could be sustained in the absence of valid invocation of the appropriate recovery provision. - HELD THAT: - Counsel for the appellant relied on earlier Tribunal decisions treating sale of SIM/Internet cards as sale of goods not amounting to provision of service. The Tribunal observed there was no appeal by the Revenue against the setting aside of the demand under Section 73(1). Because the confirmation under Section 73(A) was impermissible for the reasons given, the demand could not be sustained. The Tribunal therefore modified the impugned order and allowed the appeal. [Paras 5, 6]

Demand does not sustain and impugned order is modified; appeal allowed.

Final Conclusion: The confirmation of recovery under Section 73(A) was impermissible as it was not proposed in the SCN and the provision was not in force for the relevant period (April, 2005 to August, 2005); consequently the demand could not be sustained and the appeal is allowed.

Abatement from taxable value under Notification No.1/2006-ST - condition of non availment of CENVAT credit for inputs, capital goods or input services used for providing specified taxable services - nexus of input services with provision of mandap keeper service - double taxation from simultaneous levy as sale of food and as part of mandap keeper service

Abatement from taxable value under Notification No.1/2006-ST - availability of CENVAT credit and its nexus to taxable service - nexus of common input services with mandap keeper service - Whether the appellant was entitled to claim the abatement under Notification No.1/2006 ST for mandap keeper services notwithstanding having availed CENVAT credit of various input services. - HELD THAT: - The Tribunal examined Notification No.1/2006 ST which grants abatement from the taxable value subject to the condition that CENVAT credit of duty on inputs or capital goods or service tax on input services used for providing the specified taxable services has not been taken. The appellant had admittedly availed CENVAT credit for services such as telephone, repair and maintenance (including air conditioning), internet, contract security, technical consultancy, advertising and rent a hotel counter. The Tribunal found these to be common input services having direct or indirect nexus with the activities of the hotel, including provision of mandap keeping services. Applying the Notification's condition, the Tribunal held that the appellant could not claim that it had not availed credit of services used in providing the mandap keeping service because advertising, telephone and repair/maintenance services, inter alia, are used in attracting customers and in maintaining facilities during mandap events. On that basis the Tribunal concluded that benefit of the abatement could not be allowed to the appellant.

The claim for abatement under Notification No.1/2006 ST was rejected and the appeal dismissed.

Final Conclusion: The appeal challenging demand of service tax, interest and penalty was dismissed: the appellant was not entitled to the abatement under Notification No.1/2006 ST for the period October 2008 to September 2009 because it had availed CENVAT credit of input services that had direct or indirect nexus with the provision of mandap keeper service.

Adjustment of excess service tax payments against short payments - rate of service tax determined by date of provision of service - limitation and bar where earlier adjudication held no suppression and returns disclosed payments - penalty under the Finance Act for alleged suppression

Adjustment of excess service tax payments against short payments - relevance of ST 3 returns in establishing disclosure - Excess service tax paid in some months during 10/2000 to 03/2004 could be adjusted against short payments in other months and therefore there was no short payment liable to recovery. - HELD THAT: - The Tribunal found that the appellant had, during the period 10/2000 to 03/2004, paid service tax provisionally in excess in certain months which were subsequently adjusted. The appellate bench relied on the appellant's earlier decisions in its own cases allowing such adjustments and accepted the appellant's explanation that provisional payments were never less than the actual tax payable. Having regard to those precedents and the material showing payment and disclosure in ST 3 returns, the Tribunal held the demand premised on alleged short payments unsustainable. [Paras 6]

The demand based on alleged short payments is set aside to the extent it failed to take into account allowable adjustment of excess payments.

Rate of service tax determined by date of provision of service - Tax rate applicable is the rate in force on the date of provision of the taxable services and not the date of receipt of value. - HELD THAT: - The Tribunal observed that the services were provided during 10/2000 to 13 05 2003 when the service tax rate was 5%, whereas receipts were received later when the rate was 8%. Applying the settled legal principle, as affirmed in the cited authorities relied upon by the appellant, the correct rate is that applicable on the date of provision of services. Consequently, any portion of the demand computed by reference to the later higher rate was incorrect. [Paras 6]

The portion of the demand computed at the higher rate is not sustainable; tax must be determined by reference to the date of provision of the service.

Limitation and bar where earlier adjudication held no suppression and returns disclosed payments - penalty under the Finance Act for alleged suppression - The demand and penalty are barred by limitation and inconsistent with the earlier adjudication which found disclosure in ST 3 returns and no suppression or intent to evade duty. - HELD THAT: - The Tribunal noted that an earlier adjudication for the same period had concluded that the appellant regularly filed ST 3 returns reflecting payment of service tax and had not suppressed facts or intended to evade duty. On that basis, and following the appellant's precedent decisions, the Tribunal held that the fresh demand and the penalties imposed under the Finance Act could not be sustained as they were barred by limitation and contrary to the prior finding of disclosure. [Paras 6]

The demand and penalties are barred by limitation and are set aside in view of the earlier adjudication's findings of disclosure and absence of suppression.

Final Conclusion: Impugned adjudication order set aside; appeal allowed with consequential reliefs to the appellant on grounds of allowable adjustment of excess payments, incorrect application of a higher tax rate, and the bar of limitation in view of earlier adjudication.

Refund claims under notification 17/2009 and 52/2011 - substantial compliance versus mandatory procedural compliance - prohibition on imposing conditions not prescribed in the notification - classification of port services by amendment of definition - validity and requisites of Chartered Accountant certificate for refund claims - self certification threshold for refund claims exceeding 0.25% of FOB value - waiver of insignificant procedural requirements

Prohibition on imposing conditions not prescribed in the notification - refund claims under notification 17/2009 and 52/2011 - Whether the Commissioner (Appeals) was justified in directing verification and requiring proof that service providers had not availed exemption before allowing refund claims. - HELD THAT: - The Tribunal held that the Commissioner (Appeals) added a condition not prescribed by the notifications by directing production of evidence to show that service providers had not claimed exemption. There is no requirement in the relevant notifications to file such proof and imposing that obligation amounted to adding a new condition to the scheme of the notification, which is impermissible. The Appellants had submitted invoices showing service tax charged by the service providers; had the providers not charged tax, no refund claim would arise. Therefore the appellate direction to verify non-claim of exemption was unwarranted. [Paras 8]

The Commissioner (Appeals) erred in imposing a requirement to prove that service providers had not availed exemption; that condition cannot be read into the notifications.

Classification of port services by amendment of definition - waiver of insignificant procedural requirements - Whether the Commissioner (Appeals) rightly annulled refunds on the ground that invoices did not show that services were rendered by persons authorised by the port or that specific port licences/certificates were produced. - HELD THAT: - The Tribunal observed that by amendment to the definition, services provided within the port area are port services and the notification does not mandate production of a port authorization certificate or specific endorsement to render the service eligible. The Tribunal further noted authority holding that insignificant endorsement requirements prescribed for orderly conduct can be waived. In the present appeals the disallowance arose from non compliance with such peripheral requirements and therefore could not sustain denial of the substantive refund entitlement. [Paras 8]

The requirement to show port authorization or produce specific port licences was not prescribed by the notification and could not justify setting aside the refund orders.

Validity and requisites of Chartered Accountant certificate for refund claims - substantial compliance versus mandatory procedural compliance - Whether the Chartered Accountant certificate submitted by the claimants was invalid for lack of date and for not referring to particular bills/invoices/challans, thereby vitiating the refund claims. - HELD THAT: - The Tribunal found that the CA certificate was enclosed with the refund application and stated the shipping bill against which it was issued; the notification did not prescribe a specific format or require dating in a particular manner. The Commissioner (Appeals) characterised the certificate as a general open ended certificate, but the Tribunal held that such a conclusion was erroneous where the certificate related to the shipping bill and invoice certified by the CA were before the sanctioning authority. Consequently the absence of a prescribed format precluded treating the certificate as invalid on those grounds. [Paras 8]

The CA certificate could not be rejected as invalid merely for lack of date or absence of particularisation where it was submitted with reference to the relevant shipping bill and no format was prescribed by the notification.

Self certification threshold for refund claims exceeding 0.25% of FOB value - refund claims under notification 17/2009 and 52/2011 - Whether self certification was required where the refund amount exceeded 0.25% of the FOB value of exports. - HELD THAT: - The Tribunal noted that for refund claims exceeding the specified threshold the statutory scheme required a CA certificate rather than the exporter's self certification. The Appellants had furnished the CA certificate where required. Therefore the Commissioner (Appeals) was not justified in faulting the appellants for non submission of self certification in those cases. [Paras 8]

No self certification was required in cases where the refund exceeded 0.25% of FOB value and the CA certificate was furnished as mandated by the scheme.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) orders and restored the original orders sanctioning the refunds, holding that the Appellants met the requirements of the notifications and that the Commissioner (Appeals) had imposed conditions or rejected documents on grounds not prescribed by the notifications; consequential relief was granted to the appellants.

Goods Transport Agency service - truck owner vs Goods Transport Agency - liability to service tax on freight collected - consignment note as determinative of GTA

Goods Transport Agency service - truck owner vs Goods Transport Agency - consignment note as determinative of GTA - liability to service tax on freight collected - Whether the appellant constituted a Goods Transport Agency and was liable to pay service tax on freight collected for the period 01.01.2005 to 30.11.2005. - HELD THAT: - The Tribunal found as an admitted fact that the appellant were truck owners who received freight from Goods Transport Agencies which arranged transportation for consignors or consignees. The appellant did not issue any consignment notes; consignment notes were issued by the transport agencies (M/s. Shri Balaji Transport Company, M/s. New Sharma Transport Company, etc.). On these facts the appellant did not fall within the definition of a Goods Transport Agency and therefore did not render the GTA service which attracts service tax. The demand of service tax on the freight collected from the Goods Transport Agencies was held to be not legal or proper and was set aside. Reliance placed on various tribunal and high court decisions was noted, but the decision rests on the factual conclusion that issuance of consignment notes and characterization as GTA were absent in the appellant's case.

Appeal allowed; impugned order set aside as the appellant was not a Goods Transport Agency and was not liable to service tax on the freight for the specified period.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant, being truck owners who did not issue consignment notes and who received freight from Goods Transport Agencies, did not qualify as a Goods Transport Agency and therefore the service tax demand for 01.01.2005 to 30.11.2005 was unsustainable.

Summary order. Special Leave Petition dismissed; impugned High Court judgment and order not interfered with; pending applications, if any, disposed of.

Cenvat credit - retrospective operation of statutory amendment - right to input tax credit accrues on payment - amendment to Rule 4(1) of the Cenvat Credit Rules prospective in operation - substantive right not to be defeated by procedural irregularities - settlement commission's power to allow adjustment of duty and credit - validity of bench composition in disposal of settlement application

Cenvat credit - retrospective operation of statutory amendment - right to input tax credit accrues on payment - substantive right not to be defeated by procedural irregularities - Amendment to Rule 4(1) CCRs prescribing a time limit for taking Cenvat credit does not apply retrospectively to imports and deemed manufacture that occurred before the amendment; Cenvat credit/CVD paid at import was allowable to adjust excise liability. - HELD THAT: - The Court held that the amendment to Rule 4(1) of the Cenvat Credit Rules (introducing a six months/one year limitation) could not be given retrospective effect to deprive an assessee of a vested right to take credit which had accrued prior to the amendment. Relying on the principle that the right to input tax credit accrues when tax on inputs is paid, and on precedents emphasising that statutory provisions introducing new limitations are prima facie prospective, the Court concluded that where import and the deemed manufacture (by alteration of MRP) occurred before the amendment, the CVD paid at import and service tax on input services could be adjusted against the excise liability. The Court also noted the settled principle that substantive rights cannot be denied merely on account of procedural irregularities, and that the CCR amendment did not operate retrospectively to cut down credits already accrued. [Paras 18, 19, 20, 21, 22]

The Court affirmed that Cenvat credit (including CVD paid at import and service tax on input services) must be permitted to be adjusted where the import and deemed manufacture occurred prior to the amendment to Rule 4(1) CCRs; the Department's challenge to the CCESC decision in B.R. Ceramics (P) Ltd. is rejected.

Settlement commission's power to allow adjustment of duty and credit - validity of bench composition in disposal of settlement application - The CCESC's impugned order in Global Ceramics Pvt. Ltd. (GCPL) remanding the question of Cenvat credit to the jurisdictional Commissioner and being signed by only two members of a three member Bench was unsustainable; GCPL was entitled to adjustment of CVD and service tax and to reduction of penalty. - HELD THAT: - Although the CCESC had reasons for treating GCPL differently from B.R. Ceramics, the Court found that the conditions in the two cases were the same and that the CCESC's reliance on a remand was not appropriate. Further, because the application before the CCESC had been heard by a three member Bench, an order signed by only two members was legally untenable. Applying the legal conclusion on retrospective effect and availability of credit, the Court set aside the CCESC order in GCPL, permitted adjustment of the CVD and service tax against the admitted duty liability, and reduced the penalty to the amount imposed in the B.R. Ceramics settlement. [Paras 12, 23, 24]

The Court set aside the CCESC order in GCPL, allowed adjustment of the CVD and service tax against the settled duty, reduced the penalty to the same quantum as in B.R. Ceramics, and disposed of the writ petition accordingly.

Final Conclusion: The writ petition by Global Ceramics is allowed: the CCESC order dated 23.06.2016 is set aside, adjustment of CVD and service tax is permitted and the penalty reduced; the Department's challenge to the CCESC settlement in B.R. Ceramics is dismissed.

Cenvat credit admissibility - benefit under Notification No. 56/2002-CE - reliance on third-party investigation - corroborative evidence - toll entries and departmental verifications - penalty for erroneous availment of credit - standard of evidence for sustaining duty demand

Cenvat credit admissibility - reliance on third-party investigation - corroborative evidence - toll entries and departmental verifications - benefit under Notification No. 56/2002-CE - standard of evidence for sustaining duty demand - Admissibility of cenvat credit availed by the appellant in respect of goods procured from Jammu & Kashmir based manufacturers where Revenue's case rested upon an investigation by another Commissionerate alleging non existence of suppliers and non manufacture. - HELD THAT: - The Tribunal held that the demands and denial of cenvat credit were unsustainable where they were founded solely on the investigation conducted by Commissionerate Merrut II alleging that farmers/commission agents were non existent and thus inputs were not supplied to Jammu based units. The adjudication failed to undertake independent investigation at the end of the Jammu based manufacturers and ignored substantial corroborative materials on record. Entries of transport vehicles at toll barriers, periodic Plant & Book Checks (PBC) and visits by Range/Preventive officers, certifications from District Industry Centre and other departmental permissions and returns together constituted material corroboration of receipt of inputs and manufacturing activity. Prior Tribunal orders on identical facts were relied on to emphasise that a record based assessment which includes such corroborative evidence cannot be discarded merely because the investigating Commissionerate generalized findings; absent concrete and direct evidence to the contrary, the allegation based on assumption and third party investigation was held insufficient to deny benefit under Notification No. 56/2002 CE and to disallow cenvat credit. [Paras 9, 10, 11, 12]

The denial of cenvat credit and the demand of duty based solely on the Merrut II investigation is set aside; the appellant is entitled to cenvat credit and the benefit of Notification No. 56/2002 CE.

Penalty for erroneous availment of credit - absence of concrete evidence - standard of evidence for sustaining duty demand - Whether penalty could be sustained against the appellant for availing cenvat credit in the facts of the case. - HELD THAT: - The Tribunal found that since the demand and denial of credit were not sustainable for want of concrete corroborative evidence and were based on assumptions arising from an external investigation, the imposition of penalty could not be upheld. In view of the insufficiency of evidence to establish that the Jammu based manufacturers did not manufacture the goods or that inputs were not received, there was no basis for penalising the buyer/appellant. [Paras 13, 14]

Penalty imposed on the appellant is set aside.

Final Conclusion: Impugned order set aside; appeal allowed - cenvat credit held admissible and penalty imposed on the appellant is deleted, with consequential reliefs, on the facts and materials before the Tribunal.

Manufacturer under Section 2(f) of the Central Excise Act, 1944 - inadmissibility of statements not tested by cross examination under Section 9D of the Central Excise Act, 1944 - scope of show cause notice and limitation on adjudication beyond allegations - double taxation - concurrent levy of excise duty and service tax on same activity - extended period of limitation and requirement of willful suppression - job work / principal to principal relationship and burden of proof

Scope of show cause notice and limitation on adjudication beyond allegations - job work / principal to principal relationship and burden of proof - Whether the Commissioner could travel beyond the allegations in the show cause notices and shift the burden to appellants to prove principal to principal relationships with job workers. - HELD THAT: - The Tribunal held that the Commissioner was bound to confine his findings to the charges set out in the show cause notices and could not travel beyond their scope to frame conclusions adverse to the appellants. It was stated that the Commissioner erred in justifying his conclusion by shifting the burden on appellants to prove a principal to principal relationship with job workers; settled law places the burden of proving an allegation on the party making it. Reliance was placed on the appellate precedents cited in the show cause context and the Apex Court authority that findings beyond the scope of the SCN are unsustainable. The Commissioner's departure from the SCN's allegations and recharacterisation of factual burden was therefore held legally untenable. [Paras 8]

Findings beyond the scope of the show cause notices and the reversal of burden on appellants are not sustainable; the Commissioner erred in so proceeding.

Manufacturer under Section 2(f) of the Central Excise Act, 1944 - job work / principal to principal relationship and burden of proof - Whether the appellants were manufacturers of RVI elements within the meaning of Section 2(f) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal found on the evidence that job workers independently fabricated components of RVI and that appellants supplied raw materials and issued TDS certificates; some job workers were registered with revenue authorities and fabrication occurred at job workers' premises. The Commissioner had accepted appellants lacked manufacturing premises; the Tribunal also relied on cross examination of an inspecting agency witness which established third party inspections of components. Applying the principles in the cited apex authorities on job work and actual manufacture, the Tribunal concluded the job workers, not the appellants, were the actual manufacturers and appellants were suppliers of inputs/raw material. [Paras 9]

Appellants are not manufacturers within Section 2(f); the job workers are the actual manufacturers.

Inadmissibility of statements not tested by cross examination under Section 9D of the Central Excise Act, 1944 - Whether the Commissioner could rely upon statements of four witnesses who did not present themselves for cross examination during remand proceedings. - HELD THAT: - The Tribunal observed that the remand order had directed cross examination of four named witnesses. Although summoned, those witnesses did not appear for cross examination and, in one instance, an alternate deponent was examined. Under Section 9D the adjudicating authority cannot place reliance on statements recorded under Section 14 unless the statutory procedure for examining the witness is followed. Citing authority, the Tribunal held that statements of witnesses not produced for cross examination cannot be relied upon, and therefore the Commissioner erred in basing conclusions on those untested statements. [Paras 11]

Statements of the four witnesses not tested by cross examination are inadmissible and could not support the impugned findings.

Whether RVI elements attain finished character at job worker workshop or only on site - manufacturer under Section 2(f) of the Central Excise Act, 1944 - Whether RVI elements were cleared from job workers' units in fully manufactured condition (liable to excise) or were dispatched as components and attained final form only upon installation at site. - HELD THAT: - The Tribunal relied on an RTI reply from IOCL and documentary/material evidence showing that RVI elements were dispatched as loose components, measured, cut and assembled at site to become an integral part of the petrol pump structure, and thereafter remained fixed and treated as depreciable assets. Given these findings, and having already concluded appellants were not manufacturers, the Tribunal held that the final RVI elements came into existence at site and were not cleared as fully manufactured goods from job workers' workshops. The ratio in Virgo Industries was distinguished as in that case complete signages were assembled at the vendor's premises, unlike the present facts. [Paras 12]

RVI elements were dispatched as components and attained final form at site; they were not cleared in fully manufactured condition from job workers' premises.

Double taxation - concurrent levy of excise duty and service tax on same activity - Whether excise duty could be confirmed when appellants had been held to provide works contract service and had discharged service tax for the same activities and periods. - HELD THAT: - The Tribunal took notice that several appellants were registered under works contract service and that service tax proceedings for the same period had been adjudicated and dropped by the Service Tax Commissioner who accepted the works contract character. The Tribunal accepted the submission that the department cannot tax the same activity twice by treating it as manufacture for excise and as taxable service for service tax for the same period, and held that where activities have been rightly held to fall under works contract service, excise duty cannot be simultaneously confirmed for the same period. [Paras 10]

Excise duty cannot be confirmed on activities already held to be works contract services and taxed under service tax for the same period.

Extended period of limitation and requirement of willful suppression - Whether extended period of limitation was available to the department in the present cases. - HELD THAT: - The Tribunal concluded that extended limitation could not be invoked. The reasons included appellants' registration under service tax for works contract service prior to detection, absence of manufacturing units for appellants (components were job work fabricated), and the finding that final RVI elements came into existence at site. These facts indicated absence of willful suppression or misstatement by appellants. Consequently the Tribunal held that invoking the extended period was not justified and the Commissioner's reasons for upholding the extended period were unsustainable. [Paras 13]

Extended period of limitation is not available to the department and cannot be invoked against the appellants on these facts.

Final Conclusion: The impugned orders confirming excise demands and imposing penalties are set aside: appellants were not manufacturers within Section 2(f), statements not tested by cross examination could not be relied upon, RVI elements attained final form only at site, double taxation by confirming excise where works contract service was held is impermissible, and extended limitation was not invocable; appeals are allowed and penalties set aside.

Classification of goods - Interpretation of Central Excise Tariff headings - Binding effect of tribunal precedents - Effect of pending higher court appeal without stay - Chapter 20 classification versus Chapter 11 classification

Classification of goods - Chapter 20 classification versus Chapter 11 classification - Binding effect of tribunal precedents - Effect of pending higher court appeal without stay - Whether the respondent's product 'Potato Flakes' is rightly classified under Chapter 20 as held by the earlier Tribunal order and whether that order must be followed despite Revenue having filed a further appeal to the Supreme Court. - HELD THAT: - The Tribunal noted that the assessee manufactured 'Potato Flakes' and had claimed classification under Chapter Heading 20.04.10.00, while Revenue sought classification under Chapter 11 (Sub heading 1105 20 00). The Commissioner (Appeals) set aside the original adjudicating order by relying on an earlier final Tribunal order in the same assessee's case (Final Order No.A/70806-70807/2017-EX[DB] dated 09/08/2017) which accepted the assessee's classification under Chapter 20. Revenue conceded that the earlier Tribunal order exists and further conceded that although an appeal against that Tribunal order has been admitted by the Supreme Court on 18/05/2018, there is no stay on the operation of the Tribunal's order. In these circumstances the Tribunal correctly held that the earlier un stayed Tribunal decision must be followed and there was no justification to interfere with the Commissioner (Appeals) order upholding classification under Chapter 20. [Paras 2, 3, 4, 5]

The impugned order of the Commissioner (Appeals) set aside the original classification under Chapter 11 and followed the earlier Tribunal decision classifying 'Potato Flakes' under Chapter 20; Revenue's appeal is rejected.

Final Conclusion: Revenue's appeal dismissed; the Tribunal affirmed the Commissioner (Appeals) order following the earlier un stayed Tribunal decision classifying the product under Chapter 20, and directed that that binding decision be followed.

Cenvat credit on hiring charges of motor vehicles - time barred show cause notice - extended period of limitation without allegation of fraud, collusion or suppression - definition of input service excluding motor vehicles which are not capital goods - capital goods - inclusion of dumpers and tippers effective 01.07.2012 - strict interpretation of fiscal statutes

Time barred show cause notice - extended period of limitation without allegation of fraud, collusion or suppression - Validity of the show cause notice issued on 09.02.2015 for the period April 2012 to June 2012 in view of limitation. - HELD THAT: - The show cause notice related to April 2012 to June 2012 but was issued on 09.02.2015, beyond the normal period of limitation. The notice contains no allegation or evidence that the appellant committed fraud, collusion, suppression of facts, wilful mis statement or acted with intent to evade duty; the only allegation is a contravention without any attendant intent to evade. Absent such specific allegations or proof, the extended period of limitation could not be invoked. Consequently the entire show cause notice is time barred and must be set aside on limitation grounds. [Paras 5]

Show cause notice held time barred and set aside for want of limitation; impugned order quashed on this ground.

Cenvat credit on hiring charges of motor vehicles - definition of input service excluding motor vehicles which are not capital goods - capital goods - inclusion of dumpers and tippers effective 01.07.2012 - strict interpretation of fiscal statutes - Whether, on merits, cenvat credit was admissible on service tax paid on hiring of poclainers/dumpers and tippers for the period April 2012 to June 2012. - HELD THAT: - On the merits Rule 2(l) of the Cenvat Credit Rules, 2004 as in force for the relevant period excluded from the definition of "input service" services specified in relation to motor vehicles which are not capital goods. Dumpers and tippers ordinarily registered under the Motor Vehicles Act remain motor vehicles; once registered they cannot be treated as non motor vehicles. The specific inclusion of dumpers and tippers within the definition of capital goods was made effective only from 01.07.2012 and did not apply to the April-June 2012 period. Applying the rule as it stood in the relevant period, the appellant was not entitled to cenvat credit on the hire charges of such vehicles; accordingly, on merits the demand was sustainable. [Paras 5]

On merits the demand for denial of cenvat credit was sustainable because the vehicles in question were excluded under the contemporaneous definition of "input service", but this finding is rendered academic by the limitation bar.

Final Conclusion: Although the demand for denial of cenvat credit on hiring charges of dumpers/tippers was sustainable on merits under the definition of "input service" applicable to April-June 2012, the show cause notice was issued beyond the period of limitation without any allegation or proof of fraud, collusion or suppression; therefore the impugned order is set aside and consequential relief granted.

Cenvat Credit availment - Six months limitation on availment of Cenvat Credit under the sixth proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 - Input Service Distributor (ISD) entitlement to credit and distribution - Prospective application of legislative amendment

Cenvat Credit availment - Six months limitation on availment of Cenvat Credit under the sixth proviso to Rule 4(7) of the Cenvat Credit Rules, 2004 - Input Service Distributor (ISD) entitlement to credit and distribution - Whether the appellant is entitled to avail Cenvat Credit on the basis of ISD invoices where the ISD (head office) had taken credit beyond six months after receipt of underlying input invoices, and whether the sixth proviso to Rule 4(7) applies to ISDs. - HELD THAT: - The proviso inserted with effect from 01.09.2014 restricts the manufacturer or the provider of output service from taking Cenvat Credit after six months from the date of issue of documents specified in Rule 9(1). A plain textual reading confines the restriction to the manufacturer or service provider and does not impose a corresponding limitation on the ISD's own availment or timing of taking credit for distribution. The appellant, as a manufacturer, availed Cenvat Credit within six months from the date of the ISD invoices received by it, and those ISD invoices are documents specified under Rule 9(1). Although the Head Office (registered as ISD) had itself taken credit beyond six months in certain instances, there is no provision in the sixth proviso which bars an ISD from taking or passing on credit on a different timeline. Equity-based arguments cannot alter the clear statutory text. Accordingly, on the statutory wording and its application to the facts, the restriction does not apply to the appellant's claim; the impugned demand is therefore unsustainable. [Paras 6]

Appeal allowed; impugned order set aside and Cenvat Credit claimed by the appellant on the ISD invoices upheld.

Final Conclusion: The Tribunal held that the sixth proviso to Rule 4(7) CCR, 2004 limits only the manufacturer or service provider from availing credit after six months and does not restrict an ISD in the relevant period; since the appellant (manufacturer) availed credit within six months of receipt of ISD invoices, the demand was set aside and the appeal allowed.

Cenvat credit on outward GTA service - Sale on FOR basis - Inclusion of freight in assessable value - Application of Tribunal precedent - Board Circular No. 1065/4/2018-CX dated 08.06.2018

Cenvat credit on outward GTA service - Sale on FOR basis - Inclusion of freight in assessable value - Board Circular No. 1065/4/2018-CX dated 08.06.2018 - Appellant is entitled to Cenvat credit on outward GTA service where the sale is on FOR basis and freight is included in the assessable value on which excise duty was paid. - HELD THAT: - The Tribunal found from the purchase order that the supply of excisable goods was on FOR basis and that freight was included in the assessable value on which excise duty had been discharged. Relying on its earlier decision in M/s Salasar Copper and consistent precedents where credit was allowed in similar circumstances, and having regard to Board Circular No. 1065/4/2018-CX dated 08.06.2018, the Tribunal concluded that the issue is no longer res integra. Given these determinative facts and authorities, the appellant qualifies for Cenvat credit on the outward GTA service. [Paras 4]

Impugned order set aside; appeal allowed and Cenvat credit permitted on the outward GTA service.

Final Conclusion: On the factual finding that the sale was on FOR basis with freight included in the assessable value on which excise duty was paid, and in view of Tribunal precedent and the specified Board Circular, the appellant's appeal is allowed and Cenvat credit on outward GTA service is granted.

Cenvat credit on outward GTA service - FOR basis sale - assessable value inclusive of freight - benefit under Board Circular No. 1065/4/2018-CX dated 08.06.2018 - res-integra

Cenvat credit on outward GTA service - FOR basis sale - assessable value inclusive of freight - benefit under Board Circular No. 1065/4/2018-CX dated 08.06.2018 - Entitlement to cenvat credit in respect of outward GTA service where sale of excisable goods is on FOR basis and freight is included in the assessable value on which excise duty was paid. - HELD THAT: - The Tribunal found from the purchase order that the supply of excisable goods was on FOR basis and that freight was included in the assessable value on which excise duty had been discharged. Relying on the Tribunal's earlier decision in Salasar Copper and consistent decisions in Sanghi Industries and Ultratech Cement, together with Board Circular No. 1065/4/2018-CX dated 08.06.2018, the question was held not to be res-integra. Given these facts and precedents, the appellant is entitled to avail cenvat credit on the outward GTA service since the freight element was part of the assessable value on which duty was paid. [Paras 4, 5]

Impugned order set aside and appellant allowed cenvat credit on the outward GTA service; appeal allowed.

Final Conclusion: On the undisputed factual finding that the sale was on FOR basis and freight was included in the assessable value on which excise duty was paid, and in view of binding precedents and the Board Circular, the appellant is entitled to cenvat credit; the impugned order is set aside and the appeal is allowed.

Refund of accumulated cenvat credit - closure of factory - modvat/cenvat scheme - utilisation of cenvat credit - sale of capital goods on payment of duty - refund under Section 11-B read with rule 5 of Cenvat Credit Rules

Refund of accumulated cenvat credit - closure of factory - utilisation of cenvat credit - sale of capital goods on payment of duty - Appellant entitled to refund of accumulated cenvat credit upon closure of factory where production ceased and capital goods were sold/cleared. - HELD THAT: - The Tribunal found on the record that production at the appellant's factory had ceased since October 2015, monthly returns filed were NIL, and the jurisdictional Superintendent certified no production for the period concerned. The appellants also sold/cleared machinery and capital goods. Given cessation of production and the disposal of capital assets, there remained no scope to utilize accumulated cenvat credit under the modvat/cenvat scheme. The appellate authority erred in treating sale/clearance of capital goods on payment of duty as demonstrating continuation within the cenvat scheme; instead, disposal of capital goods coupled with NIL production indicates closure of the factory and entitlement to refund of accumulated credit. The Tribunal placed reliance on earlier judicial authorities holding that accumulated credit is refundable when the manufacturer has ceased operations and cannot utilize the credit, and therefore set aside the impugned order.

Impugned order set aside; appeal allowed and appellant held eligible for refund of accumulated cenvat credit.

Final Conclusion: The Tribunal allowed the appeal, holding that cessation of production supported by NIL returns and sale of capital goods established closure of the factory and entitlement to refund of the accumulated cenvat/modvat credit; the impugned order rejecting the refund was set aside.

Extended period of limitation - suppression of facts - intent to evade payment of duty - contravention of Rule 9(1) of CENVAT Credit Rules, 2004 - mandatory penalty under Rule 15(2) of CCR, 2004 read with Section 11AC of the Central Excise Act, 1944

Extended period of limitation - suppression of facts - contravention of Rule 9(1) of CENVAT Credit Rules, 2004 - Whether the extended period of limitation under Section 11A(4) could be invoked for CENVAT credit availed in November 2014 and December 2014. - HELD THAT: - The Tribunal found that although the assessee availed CENVAT credit in contravention of Rule 9(1) of the CENVAT Credit Rules, 2004, the show cause notice did not establish suppression of facts required to invoke the extended period. There is no provision in the ER-1 return requiring invoice-wise details or copies of invoices; absence of such details in the return therefore did not constitute nondisclosure so as to amount to suppression. The show cause notice alleged intent to evade payment of duty but did not furnish material to support malafide intention. In these circumstances the elements necessary for invoking the extended period of limitation were absent and the burden on Revenue to justify extended limitation was not discharged. [Paras 5]

Extended period of limitation could not be invoked for the CENVAT credit taken in November 2014 and December 2014.

Mandatory penalty under Rule 15(2) of CCR, 2004 read with Section 11AC of the Central Excise Act, 1944 - intent to evade payment of duty - Whether the mandatory penalty imposed by the original authority could be sustained. - HELD THAT: - The Tribunal held that imposition of the mandatory penalty depends upon the existence of the elements justifying invocation of the extended period, namely suppression or intent to evade duty. Since the show cause notice did not disclose any material establishing intent to evade and extended limitation could not be invoked, the prerequisite for imposing the mandatory penalty was absent. Consequently, penalty could not be sustained against the assessee. [Paras 5]

Penalty imposed under Rule 15(2) of CCR, 2004 read with Section 11AC cannot be imposed.

Final Conclusion: The appeal is dismissed; the Commissioner (Appeals) order setting aside the penalty is upheld because the extended period of limitation was not attracted and mandatory penalty could not be imposed.

Recovery of CENVAT credit wrongly taken but not utilised - Interest under Rule 14 payable only where credit is taken and utilised - Reversal of CENVAT credit and non-chargeability of interest - Penalty under Section 11AC for suppression of facts not waivable despite pre-show-cause payment (proviso to Section 11A) - Suppression of facts and extended period for demand

Recovery of CENVAT credit wrongly taken but not utilised - Demand of Cenvat credit upheld - HELD THAT: - The appellant did not contest the substantive demand for Cenvat credit. The Tribunal recorded that, since there was no contest on the quantum of credit demanded, the demand as confirmed by the lower authority is maintained.

The demand of Cenvat credit is upheld.

Penalty under Section 11AC for suppression of facts not waivable despite pre-show-cause payment (proviso to Section 11A) - Suppression of facts and extended period for demand - Equal penalty under Section 11AC upheld - HELD THAT: - The Tribunal found suppression of facts by the appellant leading to assessment for the extended period. Relying on the principle in UOI v. Dharamendra Textile Processors as applied to the proviso to Section 11A, the Tribunal held that penalty imposed under Section 11AC cannot be reduced or waived even if the amount was paid prior to issuance of the show cause notice. There was no basis to interfere with the imposition of equal penalty in the facts of the case.

The penalty imposed under Section 11AC is upheld.

Interest under Rule 14 payable only where credit is taken and utilised - Reversal of CENVAT credit and non-chargeability of interest - Demand of interest under Rule 14 set aside - HELD THAT: - Rule 14 distinguishes recovery where Cenvat credit has been taken but not utilised and where it has been taken and utilised. The Tribunal interpreted the Rule to mean that interest is chargeable only where the wrongly taken Cenvat credit has also been utilised (or erroneously refunded). In the present case the appellant availed Cenvat credit but did not utilise it until it was reversed; consequently interest under Rule 14 is not payable and the demand of interest was set aside.

The demand of interest under Rule 14 is set aside.

Final Conclusion: The appeal is partly allowed: the substantive demand of Cenvat credit is upheld and the equal penalty under Section 11AC is sustained for suppression leading to extended period assessment, while the demand of interest under Rule 14 is set aside because the credit, though availed, was not utilised prior to reversal.

Manufacture versus repair distinction - admissibility of Cenvat credit under Rule 16 - duty payable on transaction value - recovery limited to differential duty when activity does not amount to manufacture - penalty under Cenvat Credit Rules read with Section 11AC

Manufacture versus repair distinction - admissibility of Cenvat credit under Rule 16 - Whether dismantling and reassembly of imported textile machines by the appellant amounted to manufacture so as to permit retention of Cenvat credit without payment of duty equivalent to credit. - HELD THAT: - The Tribunal found on the material that the appellant imported machines, brought them into the factory, dismantled and reassembled them, and thereafter cleared the machines on payment of duty on transaction value. The Tribunal concluded that mere dismantling and reassembly does not amount to manufacture. Under the scheme of Rule 16, Cenvat credit on goods brought into factory is permissible subject to the consequence that where the activity does not amount to manufacture the assessee must pay duty equal to the Cenvat credit availed at the time of receipt; only where there is manufacture is duty payable on assessable value. The appellant had not furnished details of the processes undertaken and therefore could not establish that the activity amounted to manufacture.

Dismantling and reassembly did not amount to manufacture; Cenvat credit retention without payment was not permissible.

Duty payable on transaction value - recovery limited to differential duty when activity does not amount to manufacture - Extent of duty demand in view of the appellant having paid duty on transaction value at the time of clearance. - HELD THAT: - Although the appellant paid duty on transaction value when clearing the machines, the Tribunal held that because the activity did not amount to manufacture the correct liability was payment of duty equivalent to the Cenvat credit availed. Consequently, the demand confirmed by the lower authority for the entire Cenvat credit was incorrect. The appropriate demand is confined to the differential amount between the duty equivalent to the Cenvat credit and the duty already discharged on transaction value.

Demand reduced to the differential duty amount; entire Cenvat credit demand set aside to that extent.

Penalty under Cenvat Credit Rules read with Section 11AC - recovery limited to differential duty when activity does not amount to manufacture - Whether penalty confirmed by the lower authority should be imposed for the full demand or reduced in accordance with re-determined duty. - HELD THAT: - The lower authority had imposed penalty equal to the full demand. Since the duty demand has been re-determined and confined to the differential amount, the Tribunal held that the penalty under the relevant provisions must likewise be reduced to correspond to the differential duty demand. Further, the Tribunal granted the assessee the option to pay 25% of the reduced penalty provided that the differential duty, interest and 25% penalty are paid within one month from the date of the order.

Penalty reduced to correspond with the differential duty demand; option given to pay 25% of penalty subject to payment of differential duty, interest and 25% penalty within one month.

Final Conclusion: Appeal partly allowed: Cenvat credit denial set aside to the extent that demand is confined to the differential duty (appellant having paid duty on transaction value); penalty reduced correspondingly and the appellant granted the one-month option to discharge differential duty, interest and 25% of the penalty.

Cenvat credit - input service - hiring of goods (forklift) used in manufacturing - repair and maintenance of factory and plant and machinery - modernization and renovation - Annual Maintenance Contract as admissible input service

Cenvat credit - hiring of goods (forklift) used in manufacturing - input service - Entitlement to Cenvat credit of service tax paid on hiring of forklift (supply of tangible goods) used within the factory. - HELD THAT: - The Tribunal found that the hiring of the forklift was for handling raw materials and finished goods within the factory and therefore directly related to the manufacturing activity of the final products. On that basis, the service of hiring the forklift qualifies as an input service connected with production and the service tax paid on such hiring is admissible as Cenvat credit. [Paras 4]

Service tax paid on hiring of forklift used within the factory is admissible for Cenvat credit.

Cenvat credit - repair and maintenance of factory and plant and machinery - modernization and renovation - input service - Entitlement to Cenvat credit of service tax paid on Painting Service and Commercial or Industrial Construction Service used for repair and maintenance of factory and plant. - HELD THAT: - The Tribunal held that the services in question were not for new construction but for repair, maintenance, modernization and renovation of existing factory premises and plant and machinery. Such services fall within the scope of input services as they are related to the manufacturing activity. Consequently, service tax paid on painting and repair/renovation work of factory buildings and plant and machinery is admissible as Cenvat credit. [Paras 4]

Service tax on painting and construction services used for repair/maintenance/modernization of factory and plant is admissible for Cenvat credit.

Cenvat credit - Annual Maintenance Contract as admissible input service - input service - Entitlement to Cenvat credit of service tax paid under Annual Maintenance Contracts for repair of air conditioners installed in the factory. - HELD THAT: - The Tribunal observed there was no specific allegation that the AMC services were not input services and that the AC repair under AMC related to the manufacturing activity of the final products. Accordingly, such AMC services qualify as input services and the service tax paid thereon is admissible for Cenvat credit. [Paras 4]

Service tax paid under Annual Maintenance Contracts for repair of factory-installed air conditioners is admissible for Cenvat credit.

Final Conclusion: The impugned order is set aside and the appeal is allowed: Cenvat credit is admissible in respect of hiring of forklift used in factory operations, painting and repair/renovation services for factory and plant and machinery, and Annual Maintenance Contracts for air conditioners installed in the factory.

Limitation for assessment - application of amended limitation to pending proceedings - law of limitation as procedural law - condonation of delay - time barred assessments under pre HVAT regime

Condonation of delay - Eleven days' delay in re filing the appeal was condoned. - HELD THAT: - The application under Order 151 CPC for condonation of 11 days' delay in re filing was supported by affidavit and, after hearing the State's counsel, the Court exercised its discretionary power to condone the short delay. The order on condonation disposes of the connected miscellaneous petition.

Delay of 11 days in re filing the appeal is condoned; the miscellaneous petition stands disposed of.

Limitation for assessment - application of amended limitation to pending proceedings - law of limitation as procedural law - time barred assessments under pre HVAT regime - Assessments in respect of assessment years prior to 2002-03 are time barred and the impugned assessment orders passed after 31.03.2006 are beyond limitation. - HELD THAT: - Relying on the decision in VATAP No.130 2017 (Excise and Taxation Commissioner, Haryana vs. M/s. Frigoglass India Pvt. Ltd. and anr), the Court accepted that the HVAT Act's transitional provisions treat substantive provisions of the HGST Act as remaining in effect for pending actions, but the HVAT Act introduced amended limitation rules which, as a procedural change, apply to pending proceedings in respect of assessment years up to 2002 03. The HVAT Act came into force on 01.04.2003; computation under the amended limitation resulted in the limitation expiring on 31.03.2006 for assessments prior to 2002 03. Consequently, assessment orders passed on dates after expiry of that limitation are time barred and cannot be sustained.

Impugned assessments in respect of years prior to 2002 03 are beyond limitation and cannot be upheld.

Condonation of delay - limitation for assessment - Appeals were dismissed both on merits (time bar) and for unexplained delay in filing re appeals where delay ranged from 62 to 245 days. - HELD THAT: - The Court observed that for certain appeals there was inordinate delay in filing (62 to 245 days) without satisfactory explanation. Independently, since the assessments impugned were found to be time barred by the application of the limitation principles above, the appeals fail on merits. Therefore dismissal on both grounds was warranted.

Appeals are dismissed on merits as time barred and, additionally, dismissed for unexplained delay where applicable.

Final Conclusion: The miscellaneous petition for condonation of 11 days is allowed; however, the VAT appeals are dismissed - the impugned assessments for periods prior to 2002 03 are time barred under the transitional application of the HVAT Act's limitation rules, and certain appeals are further dismissed for unexplained delay in re filing.